China dominates as FDI increases 154% in May

Amounts to $295m during the month, Western countries continue to pull out

KARACHI: Foreign Direct Investment (FDI) in Pakistan rose to $295 million in May, up by 154% from $116 million in to the same month of the previous year.

Cumulatively, FDI increased by 23% to $2.03 billion in the first 11 months (Jul-May) of the ongoing fiscal year compared to $1.65 billion in the same period of the previous year, according to data released by the State Bank of Pakistan (SBP) on Wednesday.



Pakistan received $5.4 billion in fiscal year 2007-08, which is the highest amount  in the country’s history, according to the Board of Investment (BoI).

However, the country has been recording low levels of foreign investment ever since 2008. Many foreign investors, especially from western countries, have pulled out due to the persistent energy crisis, poor governance and security challenges.

44% of total FDI comes from China

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.



China leads the list of individual countries pouring investment in Pakistan in the first 11 months (Jul-May) of the current fiscal year with $879 million, up by 34% from $657 million in the same period last year. In May alone, the country received net FDI of $161 million from China.

China is followed by the Netherlands with FDI of $466 million in the first 11 months of the current fiscal year, compared to just $29.3 million in the same period of last year. This comes on  the back of a $448 million acquisition of Engro Foods by FrieslandCampina - a Dutch food company.

France came at number three with $181 million compared to $84.2 million in the same period of last year, while Turkey brought in investments of $135 million compared with just $17 million in the corresponding period.

Food was leading all sectors up until the first 11 months (Jul-May) of the current year, but the trend was changed in May 2017 due to the inflows of $125 million in power sector from China.

The biggest jump in FDI was recorded in the power sector that attracted $548 million as opposed to inflows of $703 million in the corresponding period of previous year.



The second highest jump was recorded in the food sector where the country received $476 million compared to net outflow of $53 million in the same period of last year.

Construction is the fastest  growing sector this year; it received $418 million in the first 11 months of the ongoing fiscal year, up by a massive 828% from just $45 million in the same period last year. The electronics sector also received $149 million compared to just $35 million in the period under review.

Published in The Express Tribune, June 22^nd, 2017.

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