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Thursday December 08, 2022

Foreign direct investment slides 30pc in July

By Our Correspondent
August 18, 2021

KARACHI: Pakistan’s foreign direct investment (FDI) fell 30 percent year-on-year to $90 million in July, central bank data showed on Tuesday, as Covid hampered global investors’ appetite while inflows into projects under China-Pakistan Economic Corridor (CPEC) also slowed down.

Pakistan attracted $$129 million inflows in July 2020. Analysts said 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.

They added that some power generation and distribution projects under CPEC neared completion, whereas FDI outflows were also recorded from some power projects.

State Bank of Pakistan (SBP) data showed foreign private investment into the country surged 60 percent to $89 million, wherein $1.002 billion was attributed to public investments. Outflows of $176 million was witnessed during the month

The State Bank of Pakistan’s data showed that the communications sector received $81.5 million in July followed by the trade sector ($59.5 million) and the power sector ($43.6 million).

Netherland became a major investor in Pakistan as it invested $66.9 million in July while inflows from Norway rose to $66 million

The decline in July FDI, with inflows from key investment sources such as China, Hong Kong, United Kingdom, United States and the United Arab Emirates down in the period under review; reflect what analysts attribute to the challenging foreign investment environment in Pakistan.

During the last fiscal year of 2021, FDI in Pakistan fell 28.9 percent to $1.847 billion

Central bank in its last report said 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.

In the case of the 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.

Analysts said net inflows of FDI into the country averaged about $2.3 billion in the last four years which is less than half of the country’s monthly merchandise import bill.

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