2014-15: Foreign direct investment shrinks by 58.2%

Clocks in at $709.3m during fiscal year; difference due to spectrum auction’s proceeds that fetched $610.9m.

KARACHI:

Pakistan received foreign direct investment (FDI) of $709.3 million in 2014-15, which is 58.2% less than the FDI received in the preceding fiscal year.

According to data released by the State Bank of Pakistan (SBP) on Wednesday, FDI decreased by $989.3 million year-on-year in July-June, as it amounted to almost $1.7 billion in 2013-14.

The huge year-on-year difference in FDI is mainly on the back of the auction of the telecom spectrum, as the one-time sale of 3G/4G licences had fetched the government $610.9 million in May 2014.

Largest contributor to the FDI during 2014-15 was the United States ($238.7 million), followed by China ($229.5 million) and United Arab Emirates ($222.4 million).



Net FDI in the last month of 2014-15 clocked up at negative $93.9 million as opposed to the net inflow of $188.6 million in the same month of the preceding fiscal year.

The largest net outflow of FDI in July-June was recorded in the cement category (-$219.5 million) followed by metal products (-$55.2 million) and pharmaceutical and over-the-counter products (-$47.2 million).

Multinational pharmaceutical company, Johnson and Johnson, recently wound up its operations from Pakistan and sold the company to a Pakistani pharmaceutical company for reportedly $30 million. At least four multinational pharmaceutical companies have left Pakistan for good in the last six years.

Other sectors of the economy that experienced a considerable net outflow of FDI in the last fiscal year were IT services ($29.8 million) and food ($6.5 million).

The largest increase in FDI in July-June was in the category of oil and gas exploration, which attracted $248.1 million. However, it was 50.5% less than the foreign investment received during the preceding fiscal year when it totalled $502 million.

There was a net inflow of FDI amounting to $120.8 million from the telecommunications sector in July-June. In contrast, the same sector had registered a net inflow of $429.9 million of FDI during the preceding fiscal year.

Financial businesses attracted $112.4 million worth of FDI in 2014-15. However, it was down 41.7% from the FDI into financial businesses during the preceding fiscal year.

FDI in 2013-14 had clocked up at $1.63 billion after increasing by 11.99% on an annual basis.

Published in The Express Tribune, July 16^th,  2015.

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