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KARACHI: Foreign Direct Investment (FDI) in Pakistan fell 29 percent during the first half of this fiscal year (FY21). According to the State Bank of Pakistan (SBP), Pakistan fetched less than one-billion-dollar FDI during the July-Dec of FY21. Overall FDI was amounting to $952.6 million in first half of this fiscal year compared to $1.357 billion in the same period of the last fiscal year (FY20), depicting a decline of $405 million. During the period, FDI inflows were $1.535 billion as against $582.8 million outflow.

Analysts said that the decline primarily reflected the base year effect, as last year’s FDI was inflated by a one-time inflow into the telecom sector to pay the GSM license renewal fees.

The analysis shows that FDI inflows during the review period are partially attributed to investment from China to finance the ongoing work on CPEC-related projects. With substantial increase in these inflows, China’s share in the country’s net FDI rose to 37 percent or $358 million in first half of FY21. Apart from CPEC related inflows from China, FDI was mostly concentrated in financial business, oil and gas exploration, and communications sector.

In addition, portfolio investment continued trend of negative growth with overall outflow of $244 million in first half of this fiscal year versus an investment of $19 million in same period of last fiscal year.

During the period under review, total foreign investment in Pakistan, comprising foreign direct investment, portfolio investment and foreign public investment, declined 72 percent or $1.314 billion to $514 million in July-Dec of FY21.

Month on Month basis, FDI amounting to $193.6 billion was arrived in December 2020 as against $493 million in December 2019.

Hong Kong is the second largest investing country with net FDI of $86 million and Malta ranked third with an investment of $72 million into Pakistan during first half of this fiscal year. Major investment was poured in Power sector amounted to $439 million followed by financial business sector $146 million and oil & gas explorations sector $123 million.

Copyright Business Recorder, 2021