KARACHI: Foreign direct investment (FDI) in Pakistan fell 28.9 percent to $1.847 billion in FY2021, central bank data showed on Friday, as Covid put brakes on world economy as well as inflows into projects under China-Pakistan Economic Corridor (CPEC).
Pakistan’s economy attracted $135.4 million inflows in June. That compared with $174.8 million in the same month last year.
Developed countries were hit harder by the Covid-19 than developing countries.
The overall weak global trends were also responsible for the tepid FDI inflows into Pakistan. At the same time some other factors were also at play.
There was a lack of triggers that could have stimulated fresh investment into sectors that have been receiving higher FDI over the past few years such as telecom and power, according to the third quarterly report from the State Bank of Pakistan (SBP).
In the case of telecom sector, cellular service providers had borrowed from their foreign parent companies last year to deposit their licence renewal fees with the government, it said.
These firms did not need to make large licensing payments this year and didn’t receive any significant fresh investment from abroad for other business operating activities, it added.
Some power generation and distribution projects under CPEC neared completion, whereas FDI outflows were also recorded from some power projects.
Net foreign direct investment inflows from China declined to $757.9 million in July-June FY2021 from $846.6 million a year earlier.
FDI from Hong Kong stood at $157.2 million in July-June, compared with $190.7 million in the previous year.
FDI from the Netherlands fell to $107.1 million from $133.2 million.
The country managed to attract $906 million FDI in the power sector, which was higher from $765.6 million received last year.
An investment of $235 million was poured into the financial business in July-June FY2021, compared with $274.8 million a year ago.
FDI in the oil and gas exploration sector fell to $242.8 million from $311.4 million. FDI in telecommunications also declined to $34.8 million from $622.5 million.
The SBP’s data showed that the stock market saw $211.5 million foreign investment inflows in FY2021, against outflow of $281.7 million in FY2020.
Total foreign investment rose 122.4 percent to $4.614 billion.