2MFY15: FDI drops 37%, clocks in at $87.1 million
Pakistan received foreign direct investment (FDI) of $87.1 million in the first two months of 2014-15, which is 37% less than the FDI received during the same months of the preceding fiscal year.
According to data released by the State Bank of Pakistan (SBP) on Monday, FDI decreased by $51.2 million year-on-year in July-August, as it amounted to $138.3 million in the first two months of 2013-14.
Pakistan has faced political uncertainty amid month-long sit-ins by opposition groups demanding the resignation of the prime minister.
FDI in FY2013-14 clocked up at $1.63 billion after increasing by 11.99% on an annual basis. The increase during the last fiscal year was mainly on the back of the auction of the telecom spectrum that fetched the government $610.9 million in May.
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There was a net outflow of FDI amounting to $21.7 million from the telecommunications sector in July-August. In contrast, the same sector had registered a net outflow of $49 million of FDI during the same period of the last fiscal year. FDI in the telecommunications sector in August amounted to a negative $10.2 million.
The largest increase in FDI in July-August was in the category of oil and gas exploration, which attracted $42.6 million. However, it was 34.7% less than the foreign investment received during the same months of the preceding fiscal year when it totalled $65.3 million.
Financial businesses attracted the second highest FDI in July-August, with net foreign investment of $23.7 million, down 9.2% from the corresponding two-month period of the preceding fiscal year.
Other sectors of the economy that received major FDI in July-August include tobacco and cigarettes ($20.1 million), chemicals ($19.8 million), food sector ($16.3 million), trade ($10.3 million), personal services ($10.2 million), textiles ($6.9 million) and power ($5 million).
Sectors of the economy that experienced a considerable net outflow of FDI in the first two months of the current fiscal year were pharmaceuticals (-$48.5 million), cement (-$7.6 million) and IT services (-$5 million).
As for foreign portfolio investment (FPI), which includes foreign public investment, Pakistan attracted $85.5 million during July-August, which is 10.3% higher than the FPI worth $77.5 million received in the comparable months of 2013-14.
FPI in 2013-14 was $2.74 billion, up 21 times from $124.2 million received in the preceding fiscal year.
Countries that brought significant amounts of FDI into Pakistan in July-August include the United States ($36.2 million), Hong Kong ($27.3 million), United Kingdom ($22.4 million), France ($11.9 million), Norway ($11.4 million), Japan ($8.9 million) and Italy ($5.3 million).
Countries that took out major investments out of Pakistan during the last two months are Qatar (-$9.9 million), Saudi Arabia (-$9.8 million), United Arab Emirates (-$8.9 million), Singapore (-$7.6 million), Malaysia (-$6.4 million), China (-$5.7 million), Canada ($4.1 million), Finland (-$4 million) and Switzerland (-$2.5 million).
Published in The Express Tribune, September 16th, 2014.
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COMMENTS (5)
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It is frightening to know that we are taking on loans on very high interest rates and not backing it with high return projects, rather (over)spending on projects like metro. Let me not suggest that the metro is a bad project, but it is just an badly timed project because we are allocating tremendous amounts on projects that will make it really difficult for the next govt (as we all know, PPP) to meet the debt obligations. This culture of doing projects/signing MoUs for the sake of 'publicity' is horrible and terrible.
Unlike foreign portfolio investments which is smooth, FDI which is foreign direct investment is lumpy. Month over month comparisons are meaningless on such a small base. Anything smaller than half yearly cpmparison would lead to flawed conclusions.
Pak doesn't need foes until they have friends like Imran Khan.
In the same financial yr our so called leaders would have invested many times more in the foreign countries. 87 million dollars FDI or even 138 million dollars for a country of 190 millions where a few millions this year will be getting their universities or college degrees.... where will they go for job. One thing which comes to mind right now is:
Go Nawaz Go
Well this is not good.