FDI surges 162.8 percent to $222.6mln in July

KARACHI: The country’s foreign direct investment (FDI) surged 162.8 percent year-on-year to $222.6 million during the first month of the current fiscal year of 2017/18 due to inflows mainly from Malaysia and China, the central bank said on Wednesday.

State Bank of Pakistan (SBP) data showed that the country received $84.7 million in FDI during the same month of the last fiscal year. Malaysia remained the largest source of FDI in July with $91.6 million.

In June, Malaysian telecommunications conglomerate Axiata Group Berhad announced acquisition of a Pakistan-based telecom tower operator Tanzanite Tower Private Limited at a purchase consideration of $88.9 million.

Besides, some Malaysian electricity utility companies have also invested in gas-fired power plants in Sindh and Punjab to address the growing energy needs of the country.

Analysts said the inflows from Malaysia might be to meet the working capital requirements of new ventures of the south east Asian country.

“It has nothing to do with a new investment made by the Malaysian investors, but it looks they have brought capital to finance their ongoing business ventures in Pakistan,” an analyst said.               

“Malaysia’s major public sector electricity generation firm Tenaga Nasional has recently received a $176 million contract to manage gas-fired power plant in Punjab in a bid to boost its earnings from global markets,” he added.   

China continued to pour funds in energy sector as its firms have secured contracts to set up power plants under China-Pakistan Economic Corridor (CPEC). A majority of $56 billion CPEC projects belong to energy sector.

SBP’s data showed that investments from Chinese companies rose to $72.7 million in July from $23.5 million a year earlier. Within economic sectors, trade accounted for almost half of the FDI flows in July, with investment totaling $93.9 million.

Besides, much of the investment was in power and oil and gas exploration industries.     Analysts said FDI’s prospect appears to be further improving in the backdrop of positive global economic outlook, while the country is in a dire need to attract more foreign investment to offset bleeding foreign reserves.

FDI rose 4.6 percent to $2.410 billion in FY17. SBP’s figures showed that portfolio investment saw an outflow of $11.4 million from the local bourse in July. Total foreign investment rose 57.9 percent year-on-year to $212 million in the month under review.