FDI drops 51.4 percent to $1.273bln in July-March

KARACHI: Foreign direct investment (FDI) into Pakistan slumped 51.4 percent to $1.273 billion in the nine months of this fiscal year 2018/19 from $2.621 billion a year ago, according to the figures published by the central bank on Thursday.

The bulk of these inflows came from China and the United Kingdom, and was channelled mainly to construction, oil and gas explorations, and financial and a few other sectors.

In March, the country saw a 13 percent decline in FDI flows, the data showed.

Pakistan attracted $405.8 million in FDI from China in July-March FY19, compared with $1.586 billion in the corresponding period last year.

Following China, direct investment from the UK amounted to $149.8 million from $239.2 million.

Similarly, the telecommunication sector witnessed outflows as investors pulled $157.4 million from this sector during the period under review.

Financial sector attracted $247.6 million in FDI in July-March FY19, compared with $361.2 million last year.

FDI is slowing down after growing consistently over the last three years under China-Pakistan Economic Corridor (CPEC).

“With early harvest projects nearing completion, CPEC-related power sector investments are now being shifted to the transmission and distribution side,” the SBP said in its second quarterly report published last month.

“Though the inflows in financial business and electrical machinery increased also, these were insufficient to offset the decline in inflows in power and construction as well as higher principal loan repayments by telecom firms to their parent companies abroad,” the report said.

Apart from power and construction, electrical machinery and financial business sectors also attracted Chinese investment, it added.

The exclusion of some Pakistani firms from MSCI Global Standard Index semi-annual review and domestic macroeconomic developments such as declining foreign exchange reserves, rising inflationary pressures and uncertain exchange rate policy might have also dented the investors’ confidence.