Net FDI up over twofold to $650mln in four months

KARACHI: Net foreign direct investment (FDI) climbed around 239 percent to $650 million in the first four months of the current fiscal year despite decline in inflows, as outflows showed a major drop during the period, the central bank’s data showed.

The State Bank of Pakistan (SBP) data showed that net FDI amounted to $191.9 million in the corresponding period last fiscal year.

In July-October, FDI inflow fell 12 percent to $927.5 million, while outflow sharply dropped around 68 percent to $277.5 million during the period.

In October, the net FDI stood at $108 million compared with $367.5 million in the corresponding month last year.

Analysts hailed the positive trend of direct investment into Pakistan as the inflows would strengthen the balance of payments position, boost industrial production and create job opportunities.

“Improvement in the economic indicators and foreign investor sentiment and acceleration of the privatisation of the loss-making state-owned enterprises could further boost FDI in the months ahead,” an analyst said.

“Stability regarding the exchange rate, the implantation of the IMF (International Monetary Fund) program and improved country’s external and fiscal positions may help brighten the prospect of foreign investment,” he added.

Communications and electrical machinery received the most foreign funds in the four months followed by oil and gas exploration sector. Norway and China were the biggest investors in Pakistan during the period under review.

Telenor Pakistan, the country’s second biggest telecom firm, paid $224.6 million to the government as the licence renewal fee for operation during the period. In 2004, Norwegian Telenor secured a 15-year global system for mobile communications’ licence to operate in Pakistan against a winning bid of $291 million.

In July-October, net FDI into the communication businesses stood at $278.1 million. The sector saw an outflow of $70.3 million in the same period last year.

Net foreign investment into the electrical machinery sector rose to $72.4 million from $5.3 million.

The Norwegian firms invested $263.7 million in July-October FY2020. These companies, however, pulled $39.4 million out from the country last year.

Net FDI from China stood at $122 million during the period under review. Outflows to China was more than the inflows from the country in the corresponding period a year earlier as there was a negative $149.8 million.

The SBP data further showed that stock market saw inflows of $15.6 million in July-October FY20 compared with outflows of $269.5 million a year earlier.

Total foreign investment stood at $1.102 billion during the period. That compared with $77.5 million outflows in July-October FY2019.