Other countries pull out, China increases investment in Pakistan

Published: June 18, 2016
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PHOTO: FILE

PHOTO: FILE

KARACHI: Foreign direct investment (FDI) increased 10.5% in the first 11 months of 2015-16 on a year-on-year basis, according to statistics released by the State Bank of Pakistan (SBP) on Friday.

Pakistan received FDI of $1,083.6 million in July-May, which is $103.3 million higher than the FDI received in the same 11-month period of 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).

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More than half of the total FDI that Pakistan received in July-May of 2015-16 originated from China alone. FDI from China amounted to $571.2 million in the first 11 months of the fiscal year, which is up 144.2% year on year and equals 52.7% of the total FDI Pakistan received over the same period.

Statistics show the rise in the FDI from China has largely offset the decrease in direct investments from the rest of the world in the first 11 months of 2015-16.

FDI clocked up at $64.3 million in May, up 9.1% from the FDI received in the preceding month.

Although the increase in the FDI appears satisfactory in percentage terms, a closer look at statistics reveals the year-on-year growth remained “concentrated in cross-border mergers and acquisitions” for at least the first six months of the fiscal year. According to the SBP’s latest quarterly report, the FDI in greenfield projects stayed “virtually flat” in nominal terms in Jul-Dec.

The United States has traditionally been a big source of FDI, but that trend is changing now. As opposed to making fresh investments in Pakistan, they are now pulling out their money instead. US investors have pulled out $71.9 million from Pakistan in the first 11 months of 2015-16, although net inflows from the world’s largest economy amounted to $197.1 million in the same period of the last fiscal year.

Pakistan has faced low levels of foreign investment in recent years. The SBP has called an increase in FDI ‘imperative’ for the sustainability of the economy’s external sector.

Other major outflows of FDI were from Saudi Arabian (-$91.6 million), Egyptian (-$41.7 million) and German (-$32.4 million) investors in July-May, SBP data shows.

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The largest net outflow of FDI in July-May was recorded in petro chemicals (-$136.1 million) followed by metal products (-$53.8 million), food (-$20 million) and IT services (-$15.8 million).

China was followed by United Arab Emirates ($151 million), Hong Kong ($130.6 million) and Italy ($92.7 million) as the largest contributor to the FDI in July-May.

The largest increase in FDI in July-May was in the category of power, which attracted $532.9 million, up 194.4% from a year ago. Other sectors that attracted substantial FDI in the first 11 months of 2015-16 were oil and gas exploration ($246.6 million), telecommunications ($71.9 million) and beverages ($63.9 million).

Published in The Express Tribune, June 18th, 2016.

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Reader Comments (30)

  • Sunil
    Jun 18, 2016 - 9:09AM

    Pakistan has to pay back some how. New colony of China !!!!!Recommend

  • Prada
    Jun 18, 2016 - 9:20AM

    The parallels between N.Korea and Pakistan is growing by the day. China likes these setups.Recommend

  • vinsin
    Jun 18, 2016 - 10:25AM

    @Sunil:
    I think there is some confusion in Pakistan about loan and investment. CPEC comes under loan which is said at very less interest.

    @Prada:
    These setups created by India for China. India/Nehru used to boast as successful foreign policy for 5-6 decades to bring world peace and counter west. It was India who send army to oppose unification of Korea.Recommend

  • Shuaib
    Jun 18, 2016 - 11:51AM

    @Sunil: @Prada: It’s the other way around China alone is big enough for Pakistan to sustain and grow its economy, its economy is over $10 trillion. It’s like US 2.0. We are becoming China’s Israel. Even China itself said to the US, that the US may have Israel but we (China) have Pakistan. Stop getting jealous.Recommend

  • abhi
    Jun 18, 2016 - 12:55PM

    @Shuaib

    Nice analogy. And China’s israel does make sese, because every one knows the quality of Chinese products.Recommend

  • Salim Khan
    Jun 18, 2016 - 2:58PM

    When almost all countries are leaving Pakistan and only China wants to invest. Its a classic case of Isolation. Total Isolation like North Korea. Add to that the total control of everything by military in Pakistan, exactly like North Korea. Now you know the future of Pakistan. Recommend

  • Sujith Prabu
    Jun 18, 2016 - 3:16PM

    @Shuaib: When we are trying to become US 3.0 why we should be jealoous on you becoming Israel of China. I am bit worried that China will never allow a Liberia of China to happen.Recommend

  • SB
    Jun 18, 2016 - 3:40PM

    Could not find Saudi Arabia..Is something wrong in SA and Pakistan relationshipRecommend

  • Jun 18, 2016 - 4:16PM

    @vinsin:
    The Indian role during the Korean conflict was mainly medical services and support personnel consisting of a 6000-strong custodial force. Your friend China was actively helping North Korea, as it still is. Try to be honest as it might enable you to overcome your bias. Recommend

  • Ishrat salim
    Jun 18, 2016 - 4:35PM

    What the writer has forgot to mention is that FDI inflow has decreased by 75% from 2008 till 2016. It is a very dangerous scenario to put all our eggs in one basket. Recommend

  • Salman
    Jun 18, 2016 - 5:21PM

    Jealousy of Indians are quite evident with their posts.

    Way to go to China.Recommend

  • quatro
    Jun 18, 2016 - 5:32PM

    China gets “no bid” contracts – anyone who thinks that’s good doesn’t know much about business or corruption. Recommend

  • Suresh
    Jun 18, 2016 - 5:54PM

    Unlike most cultures, the Red Indians do not stop a child crawling towards a fire. For they know once the child experiences fire, it will remember lifelong! The world should leave Pakistan to experience this Chinese fire! Governance & wisdom have never been Pak’s strength!
    Their suffering is their ‘normal’! Lies and deceit are their tradition! Illiteracy and stupidity are their inheritance! They cannot handle development and growth! This is their curse!Recommend

  • Mian
    Jun 18, 2016 - 6:13PM

    When vacuum is created , it has to be filled up in order to avoid collapse. If you are so worried then don’t create a vacuum unless YOU want it to happen. Got it? No you won’t because it requires a brain to understand economics and politics and not blind [email protected]: Recommend

  • raider
    Jun 18, 2016 - 8:47PM

    no other country than china can be benefitted from Pakistan the very reason china investing in Pakistan, Pakistan would be a bridge for china to get exports be channelized to middle east and central Asia. Only naive can invest in Pakistan where corrupts are ruling and strategic depth policy is working, but international media can still upgrade Pakistan to emerging market status to get him borrow from international donors and likely be submerged in more debt.Recommend

  • genesis
    Jun 18, 2016 - 9:25PM

    @Salman:
    What is there to be jealous about? Shows except for china the rest of the world had no confidence about investment.Recommend

  • Shoaib Wahab
    Jun 18, 2016 - 11:56PM

    To put things in perspective the recent FDI trends of Pakistan is a strong indication towards changing global scenario. What lies ahead is a lot of uncertainty, however uncertainty where gives rise to speculations also guarantees one very curtail phenomenon that is CHANGE. Its coming fast and all that is required of Pakistan is to keep themselves abreast with this change and make the most out of the opportunities presented to them. CPEC is one great example. Pakistan Zindabad…Recommend

  • American
    Jun 19, 2016 - 2:54AM

    Do Loans from China count as FDI ?Recommend

  • Buzzkill
    Jun 19, 2016 - 5:09AM

    @Shuaib: If Pakistan is China’s Israel, where was China when its Isreal was cut in half in 1971? China only has client states which it uses & abuses. Pakistan is not China’s Isreal, its China’s North Korea 2.0.Recommend

  • Ignored Fact
    Jun 19, 2016 - 8:13AM

    Investment from other countries is to dry up because they cannot compete with China in providing more beneficial investments.Recommend

  • bharat
    Jun 19, 2016 - 9:52AM

    Its a victor for Pakistani policy as they have got the Chinese to invest when the others have withdrawn investment. Recommend

  • Milind
    Jun 19, 2016 - 9:57AM

    Its good news for us in India.. With its investments in Pakistan, the last thing China would want is war-mongering Pakistan…It will make Pakistan behave and prevent it from those outrages or sabre-rattling with its neighbours, in order to protect its investments.Recommend

  • JiyoAurJeeneDo
    Jun 19, 2016 - 12:47PM

    @raider: sir that is a very accurate assessment.Recommend

  • Asghar
    Jun 19, 2016 - 1:54PM

    @Sunil:
    Dear Sunil why it is itching you that much? Recommend

  • manu
    Jun 19, 2016 - 4:38PM

    Pakistan shold be thankfull to India. chines need pakistan’s help against India bcz of compition with india in many fild . not pakistan it is china who is number 1 enemy of India they use pakistan against India frm back.so that they always keep pakistan happy.Recommend

  • Anon
    Jun 19, 2016 - 6:38PM

    @Salman…..yeah, Indians are jealous of massive fdi flow in Pakistan which makes their huge 20 billion foreign reserves, while India’s foreign reserves are just 363 billion dollarsRecommend

  • Anon
    Jun 19, 2016 - 6:41PM

    @shuaib….. Lmao..china’s Israel?
    but USA always send it troops, weapons to save Israel, but China never came forward to help it’s Israel in 65,71,99 :)Recommend

  • anon
    Jun 20, 2016 - 12:43AM

    @Shuaib:
    Think before comparing! What is Pakistan, except nuclear weapons.Recommend

  • anon
    Jun 20, 2016 - 12:47AM

    @Suresh: You are very right, slightly blunt though.Recommend

  • vagish
    Nov 4, 2016 - 7:08AM

    @Anon:
    My dear friend , it is not FDI. It is loan given to Pakistan and that too with higher rate of interest. Try to understand difference between FDI and loan.Recommend

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