KARACHI: Foreign direct investment (FDI) in Pakistan has declined by 45% to $460 million in the first five months (Jul-Nov) of the ongoing fiscal year 2016-17, compared with $840 million in the same period last year, according to data released by the State Bank of Pakistan (SBP) on Tuesday.
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.
China was the leading country with $157 million in net inflows in Pakistan during the first five months of FY17. However, inflows from China were significantly lower compared with $380 million in the same period last year.
Turkey stood second with net inflow of $126 million, showing a significant increase from just $16 million in the same period last year.
The United States was the third largest investor with FDI of $61 million, much higher than the outflows of $39 million in the period under review.
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.
Pakistan received the highest amount of FDI in the power sector which stood at $143 million in first five months of FY17, but it was massively down by 64% compared with $394 million in the same period last year. Oil and Gas exploration received a FDI of $62 million, down 49% compared with $121 million the country received in the same period of previous fiscal year.
The biggest decline in FDI was seen in financial business category in which the country received just $14 million in the first five months of FY17, down 88% compared with $114 million in the same period of last year.
Communications sectors received just $10 million, down 86% compared with $73 million in the same period of last fiscal year.
Electronics sector attracted FDI of $126 million, up significantly by 367% compared with just $27 million the country received in the same period of last fiscal year.
Similarly, personal services received a significant FDI of $46 million, up 171% compared with $17 million in the period under review.
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.
Published in The Express Tribune, December 16th, 2016.