KARACHI: Foreign direct investment (FDI) in Pakistan increased by 10% to $1.16 billion in the first seven months (Jul-Jan) of the ongoing fiscal year 2016-17, compared with $1.06 billion in the same period of the previous year, according to data released by the State Bank of Pakistan (SBP) on Wednesday.
In January 2017, however, FDI amounted to $80.8 million, up 3.4% compared with $78.1 million in January 2016.
Pakistan has recorded low levels of foreign investment in recent years. Many foreign investors especially from western countries have pulled out because of a persistent energy crisis, poor governance and security challenges.
At a time when western investors are withdrawing their investments from Pakistan, Chinese investors are pouring cash mainly due to the China-Pakistan Economic Corridor (CPEC) projects.
However, the Netherlands is the leading investor in Pakistan in the first seven months (Jul-Jan) of 2016-17.
Overall, FDI inflows from the Netherlands touched $456 million in the first seven months (Jul-Jan) of the current fiscal year 2016-17 compared with just $9.6 million in the same period of last year.
China came at second place with total FDI inflows of $244 million in the first seven months, down by a massive 48% compared to $466 million in the same period last year.
Turkey was at number three as it brought investments of $130 million in the seven months of 2016-17 compared with just $8 million in the corresponding period of last year.
The biggest jump in FDI was recorded in the food sector that attracted $468 million in the first seven months as opposed to the outflow of $33 million in the corresponding period of previous year. In July 2016, the Netherlands-based dairy company bought 51% shares in Engro Foods at an estimated $448 million, the single largest private-sector FDI in Pakistan in recent years.
The second highest jump was recorded in the electronics sector where the country received $135 million in Jul-Jan 2016-17, up 335% compared with $31 million in the same period of last year. The sector remained in the limelight in 2016 because of Turkish investment in a major electronics company in Pakistan.
The power sector attracted $245 million in the first seven months, down 50% compared with $489 million in the same period of last year.
FDI, which is a vital driver of a country’s economy, has dropped significantly in Pakistan since 2008 mainly because of political uncertainty, security issues and energy shortages.
Pakistan received $5.4 billion in fiscal year 2008, which was the highest FDI in the country’s history, according to the Board of Investment (BoI).
Published in The Express Tribune, February 16th, 2017.