FDI drops 32.5pc to $1.55bln in July-April FY2021

KARACHI: Pakistan’s foreign direct investment fell 32.5 percent to $1.553 billion in 10 months of this fiscal year, the central bank’s data showed on Friday.

FDI came at $2.301 billion in the same period of last fiscal year. In April, net FDI clocked in at $158.4 million, up 4.9 percent year-on-year and down 5.5 percent month-on-month.

FDI inflows from China, Hong Kong and Netherlands fell from a year earlier, and those from the United Kingdom increased in July-April FY2021, the State Bank of Pakistan's figures revealed.

The net FDI inflows from China decreased to $708.3 million in July-April FY2021 from $865.3 million a year ago and from Hong Kong they declined to $127.6 million from $163.5 million.

Inflows from the Netherlands also fell to $62.7 million from $108.5 million. Oil and gas explorations inflows were $189.3 million in July-April FY2021, down from $257.3 million a year earlier. FDI in the power sector, however, rose to $812.8 million in July-April FY2021 from $761.2 million a year ago.

Telecommunications sector pulled $32.5 million FDI from the country in 10 months of this fiscal year, compared with an inflow of $477.7 million last year.

FDI in financial businesses fell to $213 million from $242.3 million. Analysts said the FDI in Pakistan declined as investors delayed business decisions due to the coronavirus pandemic. The investments in the CPEC projects in the energy and infrastructure projects have also slowed down.

Analysts are optimistic about the prospects of the FDI in the next fiscal year. The restoration of the IMF programme and the economic recovery from the Covid-19 is expected to boost global investor confidence in Pakistan's economy. The National Accounts Committee has estimated this fiscal year’s gross domestic growth close to four percent. “This is a remarkable recovery and unlike past growth stints, forex reserves have also grown and the current account remains in surplus. Industry led this growth,” said Hammad Azhar, the energy minister in a tweet.

Pakistan has also introduced eight selected projects covering sustainable development goals, with the potential to attract FDI. Those projects are from varied sectors, including infrastructure, hydropower, medical devices development centre, silicon solar PV panels fabrication, production of agriculture drones and smart farms, university technology parks and IT incubation centres across Pakistan.