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October 17, 2020

FDI falls 24pc to $415.7 million in first quarter

Business

October 17, 2020

KARACHI: Pakistan’s foreign direct investment (FDI) inflows fell 23.8 percent to $415.7 million in the first quarter of this fiscal year, as risk-off investors, waiting for their COVID-hit economies to recover, were now bracing for the impact of a second wave of the pandemic, latest data showed on Friday.

According to numbers released by State Bank of Pakistan (SBP), the FDI stood at $545.5 million in the same period of the last fiscal year.

Pakistan attracted a meagre $189 million worth of FDI in September, compared with $383.5 million in the corresponding month of FY2020. The FDI slipped in July-September FY2021 for the first time since the onset of coronavirus pandemic as a troubled world economy seemed to have poured cold water on foreign investor morale for deals in various markets, including Pakistan.

The global economic activity started showing signs of recovery from the coronavirus-related slump. However, resurgence in the COVID-19 cases in many countries of the world, including Pakistan, is creating uncertainty about the future course of the pandemic and its economic fallout.

“A cooling FDI growth in Pakistan doesn’t suggest global investor confidence in the country is fading,” an analyst said. “The FDI showed a year-on-year decline in 1QFY21 as last year Pakistan had received $248 million FDI from Norway for renewal of telecom license of Telenor,” he added.

The country and the sector-wise data on FDI also justified this argument. Figures showed that FDI into the telecommunications sector fell to $26.1 million in July-September FY2021 from $299.2 million a year earlier.

Investments from Norwegian firms dropped to $29.2 million from $248.2 million. However, investment from China and the Netherlands went up in the period under review.

Inflows from China rose to $103.6 million from $55.4 million, while from Netherlands they increased to $49.1 million from $13.9 million.

A breakdown of the data revealed that FDI in Pakistan’s financial sector sharply rose to $113.3 million in July-September FY2021 from $32.3 million a year ago, while FDI in the financial businesses increased to $102.5 million from $30.7 million.

The oil and gas exploration sector attracted $67.2 million in three months of this fiscal year, compared with $39.8 million in the same period last year.

Foreign funds managers invested $81.7 million in the government securities such as treasury bills and Pakistan Investment Bonds in July-September FY2021, compared with $321.8 million a year ago.

Outflows from the stock market stood at $108.5 million in July-September FY2021, against inflows of $22.7 million in the same period of FY2020. However, total foreign investment slumped 56.3 percent to $388.9 million.