Depressing FDI figure pours in

Amounts to just $113m in July-August, 53% lower than same period of previous year


Farhan Zaheer September 20, 2016
Amounts to just $113m in July-August, 53% lower than same period of previous year. PHOTO: FILE

KARACHI: In yet another worrying sign for Pakistan’s economy, foreign direct investment (FDI) went down drastically to $113 million in the first two months (Jul-Aug) of fiscal year 2016-17 (FY17).

The amount is 53% lower than FDI of $241 million received during the same period of the preceding fiscal year, according to data released by the State Bank of Pakistan (SBP) on Tuesday.

The figures come on the back of depressing export figures that only added to the worry of economic managers, while giving critics the chance to lash out at government policy.

Meanwhile, the sectors that attracted the highest FDI in the first two months of FY17 were communications ($35.3 million), power ($31.9 million) and financial business ($31.1 million).

Major decline in FDI inflows were also noticed in power sector, tobacco and cigarettes, oil and gas explorations, transport, financial business and construction.



Pakistan has faced low levels of foreign investment in recent years. Many foreign investors have left Pakistan for good because of a persistent energy crisis and poor governance.

Previous year

Due to a net inflow of almost $600 million from China, FDI in Pakistan surged 38.8% in fiscal year 2015-16 (FY16). The country received FDI of $1,281.1 million in FY16, which is $358.2 million higher than FDI received in the preceding fiscal year.

With almost all countries that had traditionally invested in Pakistan now pulling out their investments, China has increased its FDI as part of the China-Pakistan Economic Corridor (CPEC).

Almost half of the total FDI that Pakistan received in the last fiscal year originated from China alone. FDI from China amounted to $593.9 million in 2015-16, which is up 131.3% from 2014-15 and constitutes 46.3% of the total FDI Pakistan received over the entire fiscal year.

FDI, one of the ways a country’s economy is driven forward, in Pakistan has dropped significantly since 2008 mainly because of political uncertainty, security issues and energy shortages. The country received $5.4 billion in fiscal year 2008, which was highest FDI that the country has ever received, according to the Board of Investment (BoI).

Worrying trend

Like many other regional countries, Pakistan’s exports are on a continuous decline due to a global economic slowdown. However, the government has acknowledged that Pakistan’s exports also face competitiveness issues.

This is happening at a time when the inflow of remittances is also gradually slowing down after showing stable growth for the last many years. Depressed crude oil prices have pushed many economies, especially in the oil-rich Gulf states, to cut back on spending, leading to lower remittances for countries like Pakistan. 

Published in The Express Tribune, September 21st, 2016.

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COMMENTS (2)

hamza khan | 7 years ago | Reply fire commerce minister and finance minister. then start over.
hamza khan | 7 years ago | Reply actually the highest ever was in 2007
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