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November 17, 2020

FDI increases 9.1pc to $733.1mln in July-October

Business

November 17, 2020

KARACHI: Foreign direct investment rose 9.1 percent to $733.1 million in the first four months of the current fiscal year as troubled power sector continued to attract funds for its untapped potential, the central bank’s data showed on Monday.

The State Bank of Pakistan’s (SBP) data showed that FDI amounted to $672 million in the corresponding period a year earlier. Foreign inflows increased mainly as a result of the consistent investment from the Chinese firms in the energy and infrastructure projects under the first phase of the China-Pakistan Economic Corridor (CPEC) framework.

FDI from China stood at $332.3 million compared to $64.3 million a year ago. Power sector attracted $352.3 million in the first four months of this fiscal year. Analysts said new law to replace defunct CPEC authority ordinance, the central bank’s measures and pick-up in economic activity post-lockdown are likely to further boost the direct investment during the current fiscal year.

However, the lockdown relapse could hurt the foreign investor's confidence, they said. The SBP last month introduced a new mechanism to enable companies in Pakistan to conveniently remit out disinvestment proceeds to their foreign shareholders. The goal of this initiative is to make the country a more attractive place for investment by increasing investors’ confidence and supporting ease of doing business.

Inflows from the Netherlands rose to $51.5 million in July-October FY2021 from $22.5 million a year earlier. Net FDI flows from Malta, however, stayed flat at $74.1 million in the period under review.

In October, the country attracted $317.4 million in FDI, a hefty rise of 151 percent from the corresponding month a year ago. FDI stood at $126.5 million in October last year. Chinese investment reached $228.7 million in Pakistan in the month of October alone.

In July-October, financial businesses saw an increase in FDI inflows. Direct investment in this sector rose to $118.5 million from $44.9 million. Foreign companies invested $83.1 million in the oil and gas exploration sector, compared with $75.1 million a year ago.

The SBP’s figures revealed that outflow from the stock market stood at $145.6 million in July-October FY2021 as against the inflows of $15.6 million a year earlier. Foreigners sold the government securities such as treasury bills and Pakistan Investment Bonds worth $162 million in July-October. The country saw an aggressive buying of $436.7 million in the corresponding period last year. Total foreign investment fell 62.2 percent to $425.5 million.