First half FDI down 3 percent

Foreign Direct Investment (FDI) presented a dismal performance, posting some 3 percent decline during first half (July-Dec) of this fiscal year (FY18). Economists said the ongoing political uncertainty is a major contributor to the lower foreign investment in Pakistan. Foreign investors are reluctant to invest due to rumours of premature elections. They have adopted a wait and see policy, they added.
"Foreign investors are closely monitoring Pakistan's economic growth and may invest in second half," they said. Foreign investors need political stability for long-term investment, besides improved economic conditions and basic necessities, they maintained.
The State Bank of Pakistan (SBP) Tuesday revealed that FDI fell by 2.8 percent during July-December of FY18 compared to same period of last fiscal year. Pakistan fetched FDI amounting to $1.382 billion during first half of FY18 compared to $1.422 billion in the corresponding period of FY17, depicting a decrease $40 million. During the period under review, the country received FDI inflows amounting to $1.721 billion against outflows of $340 million.
The second component of foreign investment, ie, portfolio investment also posted a negative growth because of poor performance of the country's equity market. Portfolio investment declined by 50 percent to stand at negative $128.4 million during the first half of FY18.
However, during the period under review, foreign public investment posted a healthy growth supported by issuance of Sukuk and Eurobond in the international market in the last week of November. The payment of $2.5 billion of Sukuk and Eurobond arrived in the first week of December, of which this segment is witnessing a massive surge. With 145 percent increase, foreign public investment reached $2.45 billion in first six months of this fiscal year.
Similarly, net inflows of foreign investment in Pakistan comprising FDI, portfolio investment and foreign public investment mounted by 71 percent during July-December of FY18. Total foreign investment in Pakistan surged to $3.704 billion at the end of first half of this fiscal year compared to $2.165 billion in the same period of last fiscal year, showing an increase of $1.538 billion.