July-January: Oil and gas sector attracts highest FDI

Pakistan receives $523m overall in first seven months of 2013-14.

KARACHI:

Pakistan received foreign direct investment (FDI) of $523 million in the first seven months of 2013-14, slightly lower than the amount the country received in the corresponding seven months of the preceding fiscal year.

According to data released by the State Bank of Pakistan (SBP) on Monday, the year-on-year drop in FDI during the seven-month period was 1%, as it amounted to $528.3 million in July-January 2012-13.

However, there was a sharp increase in FDI in January alone, as it amounted to $106.9 million. In contrast, there was an outflow of $40.5 million in the same month of the preceding fiscal year.

FDI in the first half of the ongoing fiscal year was of $416.1 million, which was 26.8% lower than the amount the country received in the corresponding six months of the preceding fiscal year.



Pakistan had received FDI worth over $1.4 billion in last fiscal year.

The oil and gas sector attracted the highest amount of FDI in the July-January period. It attracted a net foreign investment of $258 million. However, it was 18% lower than the investment of $315 million it received in the corresponding seven-month period in the preceding fiscal year.

Sectors of the economy that received major FDI during the last seven months include financial businesses ($90.9 million), chemicals ($68.4 million), tobacco and cigarettes ($45.5 million), food ($71.3 million) and beverages ($23.9 million).

In contrast, a major dip in FDI was registered in the telecommunications sector, where the net outflow of investment remained $124.7 million in the period under review. Other sectors that witnessed a considerable net outflow of FDI in July-December were petroleum refining ($10 million), electrical machinery ($11 million) and hydel power ($6.2) million.

As for foreign portfolio investment (FPI), which includes foreign public investment, Pakistan attracted $117.2 million during the July-January period as opposed to $135.4 million in the corresponding seven months last year. This reflects a year-on-year decline of 13.4% in FPI.

Countries that brought significant amounts of FDI into Pakistan during the period under review include Switzerland ($137.8 million), United States ($111.1 million), Hong Kong ($123.9 million), United Kingdom ($65.7 million), Italy ($50.7 million), France ($41.7 million), Oman ($35.3 million) and Austria ($29.2 million).

Countries that took out major investments out of Pakistan in the last seven months are Norway ($52.7 million), Qatar ($34 million), Saudi Arabia ($29.5 million) and Singapore ($27.2 million).

Pakistan’s foreign exchange reserves have been declining for some time now due to many reasons, including a lack of FDI in the country. Foreign exchange reserves held by the central bank stood at $2.8 billion as on February 7.

Published in The Express Tribune, February 18^th, 2014.

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