China leads as foreign direct investment soars 147%

Amounts to $235m in August, power sector attracts highest inflow

KARACHI: Pakistan received foreign direct investment (FDI) worth $235 million in August 2017, up 147% compared with $95 million in the same month of last year, according to data released by the State Bank of Pakistan (SBP) on Monday.

This takes the first two months of FDI in fiscal year 2017-18 to $457 million, up 155% compared with $179.4 million in the same period of last year.

Countries that brought highest FDI in August 2017 were China ($187 million), Malaysia ($19 million) and France ($9.5 million). These are the same countries that were leading investors in the first two months (July and August 2017) in fiscal year 2017-18.



China brought $259 million in first two months of fiscal year 2017-18 compared with $48 million in the same period of last year, up 440%. Malaysia invested $111 million in the first two months of fiscal year 2017-18 compared with just $1.3 million in the same period of last year.

FDI from France stood flat at $19 million in the first two months of fiscal year 2017-18 compared with $19.1 million in the same period of last year.



Sector-wise investment

Power sector has received the highest FDI so far. In the first two months of fiscal year 2017-18, Pakistan received $211 million in power sector compared to $83 million mainly from China in coal-based power generation.

Communications sector attracted the second highest FDI of $95 million in the first two months of fiscal year 2017-18 compared with $26 million in the same period of last year.

This was followed by the construction sector which drew $56 million in the first two months of fiscal year 2017-18 compared with just $1.6 million in the period under review.

While oil and gas exploration sector received $31 million in the first two months of fiscal year 2017-18 compared with $14 million in the same period of last year. Most of the FDI that Pakistan is receiving these days is due to mega projects that are under construction under the China-Pakistan Economic Corridor (CPEC).

Analysts say while Chinese investment is crucial, other countries (the US and western European countries) are increasingly shying away from Pakistan since the financial crisis of 2008 which should be a cause of concern for the policymakers of the country.



Pakistan received $2.41 billion in FDI in the fiscal year ended June 30, 2017, up 5% from $2.3 billion in the previous year. It received $5.4 billion in fiscal year 2007-08, which was the highest amount in the country’s history, according to the Board of Investment.

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

Published in The Express Tribune, September 19^th, 2017.

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