FDI jumps 20pc to $1.056bln in July-Dec FY2022

KARACHI: Pakistan’s foreign direct investment increased 20 percent to $1.056 billion in the first half of this fiscal year with China being the top investor, central bank data showed on Tuesday.

In December, FDI flows stood at $218.7 million, compared with $169.4 million in the same month of the last fiscal year.

The direct investment rose 29 percent year-on-year.

The figures issued by State Bank of Pakistan (SBP) revealed China led the investment with net FDI of $307 million in the first half of FY2022, compared with $390 million during corresponding period last year.

The United States was the second largest investor with net FDI of $149 million in July-December period of this fiscal, compared with $68 million invested by the US firms in the country last year.

Major investment was poured into the power sector ($364 million) followed

by the financial business sector ($206 million) and communications sector ($147 million).

Emerging markets in the world, as well as Pakistan, have been faced with a difficult situation as far as FDI is concerned. However, these global factors did have an impact on the FDI inflows, some local issues are also responsible for it.

In the absence of any major telecom spectrum issuance or licence renewals, the telecom sector received far less FDI inflows than last year. In FY20, the government had earned licence renewal fees from the country’s top three cellular service operators.

Telecom firms are usually lent money by their foreign sponsors to pay these fees, and these intercompany loans make

major chunk of the FDI coming into the country.

The telecoms also see burst of FDI every time the government sells telecom spectrums or when licence fees from cellular firms are received.

It has lately been being driven by sector-specific activity in a few segments of the economy for many years now, and is primarily dependent on progress on China-Pakistan Economic Corridor related projects.

The major share of these investments that went into the power sector mostly came from China.

Central bank in a report stressed on the fast-tracking of the second phase of CPEC, while taking advantage of the opportunities created by the upcoming special economic zones to draw more foreign direct investment from China.

It said easing the policies by relaxing concerned rules, were likely to pull in foreign investment into more dynamic sectors of the economy like Information and Communications Technology.