FDI falls 38.2pc to $249mln in July-Sept

KARACHI: Foreign direct investment (FDI) into Pakistan fell 38.2 percent to $249.3 million during the first quarter of the current fiscal year of 2016/17, the central bank said on Monday.

The State Bank of Pakistan (SBP) data showed that FDI amounted to $403.3 million in the same quarter (July-September) of the last fiscal year. The country fetched $136.7 million in FDI during September as compared to $162.6 million in the same month a year earlier.

China, which has so far been the biggest source of foreign investment, invested $90.8 million in the country during the quarter under review as compared to $192.1 million a year earlier. “Presently, the country is much relying on FDI inflows and pledges from China under the China-Pakistan Economic Corridor,” an analyst said. “Apparently, the cross-border investments from China have slowed down for the time being.”

Power and oil and gas exploration sectors endured the lowest FDI drops during the three-month period. FDI into power sector dropped to $61.7 million in July-Sept FY17 as against $189.4 million in the corresponding period of FY16. Likewise, oil and gas exploration companies attracted $37.8 million worth of foreign investments in the period under review as compared to $70.7 million a year earlier.

Telecom sector received $21 million as FDI in the first quarter of the current fiscal year as against $6.9 million in the corresponding period of FY16.  Analysts said sluggish economic growth in advanced economies could also be a a reason behind the falling FDIs.

The United Nations Conference on Trade and Development, in its report, forecast that global FDI flows are likely to drop between 10 percent and 15 percent in 2016. The government is taking measures to make Pakistan an attractive destination for foreign investors by improving business climate and governance.

Early this year, the government formulated a new comprehensive country-wide strategy to improve the business climate and promote competitiveness in view of the country’s slip in ‘the 2016 Doing Business’ ranking.

The SBP’s data showed that the stock market received $28 million as portfolio investment in July-September FY17 as against an outflow of $91.5 million in the similar period of FY16. The data further showed that total foreign investment into the country also declined to $368.1 million in the period under review as compared to $793.2 million a year ago.