China dominates Pakistan’s FDI figures, Norway pulls out

Country sees $207m of net foreign direct investment in November


Our Correspondent December 16, 2017
PHOTO: REUTERS

KARACHI: China, a country that started pouring in Foreign Direct Investment (FDI) in Pakistan under the China-Pakistan Economic Corridor (CPEC) from 2015, is now completely dominating foreign sources of FDI in Pakistan.

Pakistan received net FDI worth $207 million in November 2017 out of which $206 million came from China, according to data released by the State Bank of Pakistan (SBP) on Friday.

Other countries did bring in FDI in the country in November 2017, but net results were all in all a Chinese show as Norway pulled out a significant $75 million in November 2017.

November 2017 FDI numbers were still up 8.3% compared with inflows of $191 million in the same month of previous year.

CPEC, OBOR game-changer for entire region

Other countries that made significant investments in November 2017 were US ($16 million), Luxemburg ($13 million), France ($10 million) and Singapore ($7.4 million).

Total FDI in the first five months of fiscal year 2017-18 touched $1.146 billion, up 57% compared with $729 million in the same period of the preceding year.

In July-November FY2017-18, Chinese investments in Pakistan jumped to $837 million, up 286% compared with $217 million in the corresponding period of previous year.

The second highest FDI came from Malaysia, which amounted to $113 million in the first five months, up 927% compared with just $11 million in the corresponding period of previous year.

France stood at third position with investment flow of $48 million and the US at fourth with $43 million. Hungary brought $33 million, the Netherlands brought $32 million and the UAE injected $26 million.

Sector-wise investment

The power sector received the highest FDI in November 2017 as the country got $117 million for the sector while the construction received $94 million.

So far, in the first five months of FY2017-18, the power sector led the FDI inflow, which stood at $539 million. Analysts believe this is happening due to investments going into mega power projects under the CPEC.

Overall, the construction sector came at the second place as it received $271 million in the first five months of FY2017-18. Other notable sectors were financial business ($75 million), oil and gas exploration ($74 million) and trade ($57 million).

Analysts say while Chinese investment is crucial, other countries including the US and western European countries have been increasingly shying away since the financial crisis of 2008, which should be a cause for concern for 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 got $5.4 billion in 2007-08, which was the highest inflow 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 persistent energy crisis, poor governance and security challenges.

Published in The Express Tribune, December 16th, 2017.

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COMMENTS (1)

Ash Man | 6 years ago | Reply FDI is a good way to bridge the fiscal deficit. Unfortunately there is very little from OIC countries.
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