FDI in Pakistan drops 21% in February

Amount for July-February, however, registers 6% increase

KARACHI: Foreign direct investment (FDI) in Pakistan decreased 21% to $123 million in February, compared with the same month of the previous year when it amounted to $155 million.

However, cumulative FDI increased 6% to $1.285 billion in the first eight months (Jul-Feb) of the ongoing fiscal year 2016-17, compared with $1.212 billion in the same period of the previous year, according to data released by the State Bank of Pakistan (SBP) on Thursday.



Pakistan has been recording low levels of foreign investment since 2008. Many foreign investors especially from western countries have pulled out because of a persistent energy crisis, poor governance and security challenges.

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).

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 leads the list of leading foreign investors in Pakistan in the first eight months (Jul-Feb) of 2016-17 - its pole position comes on back of the $448-million Engro Foods’ acquisition that FrieslandCampina completed during the ongoing fiscal year.

Overall, FDI inflows from the Netherlands touched $455 million in the first eight months (Jul-Feb) of the current fiscal year 2016-17 compared with just $38 million in the same period of last year.

China came at second place with total FDI inflows of $274 million in the first eight months, down by a massive 49% compared with $538 million in the same period last year.

France came at number three with $140 million in the first eight months of 2016-17 compared with $60 million in the same period of last year.



Turkey was at number four as it brought investments of $131 million in the eight months of 2016-17 compared with just $8.3 million in the corresponding period of last year.

Winners

The biggest jump in FDI was recorded in the food sector that attracted $468 million in the first eight months as opposed to the outflow of $35.4 million in the corresponding period of previous year.

The second highest jump was recorded in the electronics sector where the country received $143 million in Jul-Feb 2016-17, up 361% 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.

Construction sector attracted $156 million in the first eight months of fiscal year 2016-17, up by a significant 346% compared to just $35 million in the same period last year.

Losers

The power sector attracted $258 million in the first eight months, down 52% compared with $533 million in the same period of last year.

Published in The Express Tribune, March 17^th, 2017.

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