FDI drops to half at $1.6b in July-May FY19
PBC CEO says drop comes in wake of unwelcome environment for investors
PHOTO: EXPRESS
KARACHI:
Foreign investment in different productive sectors of the economy, like construction and power, fell to half at $1.6 billion in first 11 months of the outgoing fiscal year 2018-19.
Foreign direct investment (FDI) stood at $3.16 billion in the same period of previous fiscal year, the State Bank of Pakistan (SBP) reported on Tuesday.
Pakistan Business Council (PBC) Chief Executive Officer Ehsan Malik said the drop in foreign investment came in the wake of unwelcome environment in Pakistan. “In the current circumstances, the investment, whether foreign or local, will remain restricted,” he said. Authorities failed to facilitate both domestic and foreign investors, Malik remarked. “Investors have been waiting for months and years to get utility connections. For example, Lucky Cement is ready to set up a KIA vehicle production plant at Port Qasim, but has been forced to wait for utilities for a long time,” he said, adding “who would come to invest in such circumstances.”
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“How the authorities will persuade foreign investors to launch new projects, when they have failed to convince local investors to set up new projects?” the PBC CEO asked.
“Foreign direct investment should be separate from the one the country may attract by selling government assets like the two LNG-fired power plants in Punjab, which are under consideration,” he said.
Second, Pakistan is in a transitional phase as it has recently reprioritised sectors for attracting fresh FDI. “Now, it is time to attract investment in export-oriented and import-substituting sectors,” he said.
Earlier, the country attracted adequate investment in import-based local consumption sectors like packaged products and fast moving consumer goods, like soap, shampoo and detergents. “We don’t need new players in these sectors. We already have big names there,” he said.
The country needs to establish Special Economic Zones (SEZs) to attract new investment in the prioritised sectors of the economy. “The zones must get utility connections on a fast track,” he emphasised.
Five-month high FDI
The country attracted five-month high FDI at $230 million in May 2019. It, however, was 26% lower than the $312.5 million recorded in the same month of previous year, according to the central bank.
“Most of the foreign investment coming to Pakistan these days is to meet current expenditure and not for setting up new projects,” Malik added.
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Country-wise FDI
China remained the largest investor with net FDI of $495.7 million in 11 months. It, however, remained 74% less than the $1.82 billion invested in the same period of last year.
The United Kingdom was the second largest investor with $171.2 million compared to $282.1 million last year.
Malta divested $128.3 million in 11 months compared to zero FDI flow in the same period of last year. Argentina, Finland, Denmark, Poland and Qatar divested in the range of $0.8 million to $22.1 million, according to the SBP.
Published in The Express Tribune, June 19th, 2019.
Foreign investment in different productive sectors of the economy, like construction and power, fell to half at $1.6 billion in first 11 months of the outgoing fiscal year 2018-19.
Foreign direct investment (FDI) stood at $3.16 billion in the same period of previous fiscal year, the State Bank of Pakistan (SBP) reported on Tuesday.
Pakistan Business Council (PBC) Chief Executive Officer Ehsan Malik said the drop in foreign investment came in the wake of unwelcome environment in Pakistan. “In the current circumstances, the investment, whether foreign or local, will remain restricted,” he said. Authorities failed to facilitate both domestic and foreign investors, Malik remarked. “Investors have been waiting for months and years to get utility connections. For example, Lucky Cement is ready to set up a KIA vehicle production plant at Port Qasim, but has been forced to wait for utilities for a long time,” he said, adding “who would come to invest in such circumstances.”
FDI drops 52% as economic uncertainty bites
“How the authorities will persuade foreign investors to launch new projects, when they have failed to convince local investors to set up new projects?” the PBC CEO asked.
“Foreign direct investment should be separate from the one the country may attract by selling government assets like the two LNG-fired power plants in Punjab, which are under consideration,” he said.
Second, Pakistan is in a transitional phase as it has recently reprioritised sectors for attracting fresh FDI. “Now, it is time to attract investment in export-oriented and import-substituting sectors,” he said.
Earlier, the country attracted adequate investment in import-based local consumption sectors like packaged products and fast moving consumer goods, like soap, shampoo and detergents. “We don’t need new players in these sectors. We already have big names there,” he said.
The country needs to establish Special Economic Zones (SEZs) to attract new investment in the prioritised sectors of the economy. “The zones must get utility connections on a fast track,” he emphasised.
Five-month high FDI
The country attracted five-month high FDI at $230 million in May 2019. It, however, was 26% lower than the $312.5 million recorded in the same month of previous year, according to the central bank.
“Most of the foreign investment coming to Pakistan these days is to meet current expenditure and not for setting up new projects,” Malik added.
IMF wanted 600bps interest rate hike: Asad Umar
Country-wise FDI
China remained the largest investor with net FDI of $495.7 million in 11 months. It, however, remained 74% less than the $1.82 billion invested in the same period of last year.
The United Kingdom was the second largest investor with $171.2 million compared to $282.1 million last year.
Malta divested $128.3 million in 11 months compared to zero FDI flow in the same period of last year. Argentina, Finland, Denmark, Poland and Qatar divested in the range of $0.8 million to $22.1 million, according to the SBP.
Published in The Express Tribune, June 19th, 2019.