FDI increases 10.4pc to $1.08bln in July-Dec

KARACHI: Dutch acquisition of Engro Foods helped boost Pakistan’s foreign direct investment (FDI), which rose 10.4 percent in the first half of the current fiscal year of 2016/17 as per the central bank’s data published Monday.

Net flows to the country from foreign companies increased to $1.08 billion during July-December FY17 from $978.5 million a year earlier.

FDI flows stood at $594.7 million during December 2016, compared with $138.8 million in 2015.

Netherlands emerged as the biggest source of FDI for the country during the six months of FY17. Investments include acquisition of assets.

However, foreign investment from China dropped to $204 million in July-December FY17 from $443.8 million a year ago.

Analysts said the food sector drove up Pakistan’s foreign direct investment, offsetting a decline in inflows to oil and gas.

“FDI increased in the food sector following acquisition of shares by a Netherland-based dairy company in Engro foods,” said an analyst.

A Dutch company acquired 51 percent stake in Engro Foods last month.

The figures, published by the State Bank of Pakistan (SBP) revealed that net flows to the food sector rose to $467.4 million in July-December FY17 against the outflows of $29.6 million during the same period of the previous fiscal year.

FDI is on the decline since fiscal year 2015. Political instability, security challenges and poor governance make the country a less attractive destination for the foreign investors.  

Apart from the food sector, growth was particularly weak in the oil and gas, power and financial and telecommunications businesses. Net flows to the oil and gas sector fell to $86.2 million against $150 million recorded in July-September FY16.  

Power sector went down in terms of receipts of foreign direct investment. The multinational power companies could attract only $211 million investment in power sector in first half of FY17, compared with $457 million during the corresponding period of FY16.  

In telecommunications, which saw a net inflow of $94.2 million in July-December FY16, there was an outflow of $13.2 million in the same period of this fiscal year. Portfolio investment at the equity market saw an outflow of $254.4 million in July-December FY17, compared with the outflow of $236.9 million in July-December FY16.