First quarter: Pakistan receives $249m in FDI, down 38%

Reading has improved compared to first two months of FY17

KARACHI: Pakistan has attracted $249 million in Foreign Direct Investment (FDI) in first quarter (Jul-Sep) of fiscal year 2016-17 (FY17), down 38% compared with $403 million in the same period of last fiscal year, according to data released by the State Bank of Pakistan (SBP) on Monday.

Despite a double-digit drop, the numbers are still better than the FDI figures that the country received in the first two months (Jul-Aug) FY17. Pakistan received just $113 million in July and August 2016, down 53% compared with $241 million in the same period of last fiscal year.

The country has recorded low levels of foreign investment in recent years. Many foreign investors have pulled out because of a persistent energy crisis and poor governance.

The sectors that attracted major inflows in the first three months of FY17 included personal services and communications. The country received $35.1 million in the first quarter in the category of personal services, up 258% compared with $9.8 million in the same period of last year.

Similarly, Pakistan received $24.2 million in the communications sector, up 251% compared with $6.9 million in the previous year.

However, the sectors where the country saw major outflows were power, oil and gas exploration and financial business.

Pakistan received just $61.7 million in the power sector, down a massive 67% compared with $189 million in the corresponding period of last year.

Similarly, inflows in financial business dropped to just $13.5 million, down 84% compared with $84.7 million in the previous year. Inflows in oil and gas exploration dropped to $37.8 million compared with $70.7 million in FY16.

Owing to a net inflow of around $600 million from China, the FDI in Pakistan had surged 38.8% in fiscal year 2015-16. The country received $1,281.1 million in FY16, which was $358.2 million higher than the 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) programme.

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, up 131.3% from 2014-15 and constituted 46.3% of the total FDI Pakistan received in the fiscal year.

FDI, one of the ways through which a country’s economy is driven forward, has dropped significantly in Pakistan since 2008 mainly because of political uncertainty, security issues and energy shortages.

Published in The Express Tribune, October 18^th, 2016.

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