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September 19, 2019

FDI drops 58.4 percent to $156.7 million in July-August


September 19, 2019

KARACHI: Foreign direct investment (FDI) into Pakistan fell 58.4 percent in the first two months of the current fiscal year to $156.7 million, the central bank’s data showed on Wednesday.

In August alone, net FDI declined 57.9 percent to $83.4 million, compared with $197.9 million inflows in the corresponding month last year.

The drop in inflows to the country was largely caused by the decline in Chinese investments.

Capital infusion came from China, which fell to $28.9 million in July-August FY20 from $216.0 million a year earlier.

China-Pakistan Economic Corridor (CPEC) investment projects in energy and infrastructure sectors have been completed or are near to completion.

Direct investment from the United Kingdom dropped to $$22.8 million from $65 million.

Money channelled into firms engaged in oil and gas explorations, trade, and financial business remained low during the period under review, according to the central bank’s figures.

Multinational companies invested $21.3 million in the oil and gas exploration sector in July-August FY20, compared with $44.5 million in the same period last year.

Financial businesses fetched $10.1 million in the two months of this fiscal, compared with $26.5 million last year.

However, power sector saw $4.3 million pulled out. Foreign companies invested $59.4 million in July-August FY19.

The country’s balance of payments showed improvement with significant reduction in the current account deficit and building up of foreign exchange reserves.

However, a declining trend in the FDI was not a positive sign for the external sector.

Pakistan Tehreek-e-Insaf (PTI) government vowed to improve ease of doing business and has been more open to foreign investors by accelerating privatisation programme to get a bigger share of FDIs flowing into South Asia.

Building of special economic zones under CPEC might also help boost the FDI in the country in future.

The State Bank of Pakistan’s data further showed that foreign portfolio inflows recorded at $107.3 million in July-August FY20.

However, portfolio investment witnessed an outflow of $129.6 million in the same period of FY19. Total foreign investment rose 6.7 percent to $264 million, the central bank data showed.