AGL 5.51 Increased By ▲ 0.11 (2.04%)
ANL 8.49 Decreased By ▼ -0.30 (-3.41%)
AVN 75.73 Decreased By ▼ -0.43 (-0.56%)
BOP 5.21 Increased By ▲ 0.04 (0.77%)
CNERGY 4.42 Decreased By ▼ -0.06 (-1.34%)
EFERT 81.53 Increased By ▲ 0.43 (0.53%)
EPCL 49.54 Increased By ▲ 0.54 (1.1%)
FCCL 12.68 Decreased By ▼ -0.02 (-0.16%)
FFL 5.52 Decreased By ▼ -0.07 (-1.25%)
FLYNG 6.74 Decreased By ▼ -0.24 (-3.44%)
FNEL 4.64 Increased By ▲ 0.01 (0.22%)
GGGL 8.45 Decreased By ▼ -0.14 (-1.63%)
GGL 13.85 Decreased By ▼ -0.21 (-1.49%)
HUMNL 6.03 Increased By ▲ 0.53 (9.64%)
KEL 2.56 Decreased By ▼ -0.04 (-1.54%)
LOTCHEM 27.62 Decreased By ▼ -0.09 (-0.32%)
MLCF 23.75 Increased By ▲ 0.07 (0.3%)
OGDC 71.22 Decreased By ▼ -0.23 (-0.32%)
PAEL 15.16 Decreased By ▼ -0.04 (-0.26%)
PIBTL 4.87 Decreased By ▼ -0.04 (-0.81%)
PRL 15.86 Increased By ▲ 0.06 (0.38%)
SILK 1.09 Increased By ▲ 0.04 (3.81%)
TELE 8.84 Decreased By ▼ -0.15 (-1.67%)
TPL 7.08 Decreased By ▼ -0.08 (-1.12%)
TPLP 19.20 Decreased By ▼ -0.02 (-0.1%)
TREET 20.87 Decreased By ▼ -0.27 (-1.28%)
TRG 136.73 Decreased By ▼ -0.02 (-0.01%)
UNITY 16.54 Decreased By ▼ -0.26 (-1.55%)
WAVES 9.16 Increased By ▲ 0.06 (0.66%)
WTL 1.34 Decreased By ▼ -0.03 (-2.19%)
BR100 4,158 Decreased By -27.7 (-0.66%)
BR30 15,339 Decreased By -127.2 (-0.82%)
KSE100 41,652 Decreased By -167.7 (-0.4%)
KSE30 15,380 Decreased By -68.1 (-0.44%)
Follow us

Foreign direct investment during 11MFY21 continued to be dominated by China (including Hong Kong) – accounting for 49 percent of the total net flows in 11MFY21 versus 42 percent in 11MFY20.

However, despite China leading the FDI flows - largely in the power sector of the country - the overall FDI has been declining for long – 11MFY21 net FDI was down by 28 percent to stand at $1.75 billion. Not only that, FDI from China is also tapering due to CPEC initial infrastructure and construction projects completing. A key factor behind declining net FDI is also the rising outflows, which according to SBP’s latest quarterly report has been due to the repayment of intercompany loans by firms in the telecom, electronics, and power sectors. Falling FDI flows into the country has been a trend that started much before the global FDI was impacted by COVID-19 pandemic.

FDI is concentrated. It has been like this since 2015-16 with the initiation of CPEC; and it looks like it will continue to be like this at least for the foreseeable future as the governemnt is reportedly working on framing an effective strategy for Chinese industrial relocation in Pakistan. While this is a good opportunity to populate the special economic zones (SEZs) and attract FDI especially at a time when industries in China are relocating; it shows that the focus of the government will continue to be attracting investment from China, which might continue to keep attention off other destinations and value chains when it comes to devising an inclusive investment policy. This space has talked about the need to achieve geographic as well as sectoral diversification and depth in foreign direct investment.

Nonetheless, increased investment from China under CPEC is much needed; and especially during a time when global greenfield investment is severely impacted, MNCs have reduced their new equity investments, and parent companies have withdrawn intra-company loans from their affiliates. The central bank has also highlighted that so far whatever FDI is being attracted from China, it is still phase 1 project under CPEC. However, the second phase, which is the shift towards industrial development, agriculture mechanization, tourism and social development is yet to show any FDI flows.

Comments

Comments are closed.

FDI – all eggs in China’s basket

Pakistan seeking $4.2bn from Saudi Arabia: reports

Will take action if terrorists regroup in Afghanistan: US State Department

Arshad Sharif killing: SC directs JIT to submit progress report every two weeks

IHC bars FIA from arresting Suleman Shehbaz upon return from UK

Rupee continues to depreciate, settles at 224.37 against US dollar

Roshan Digital Account: monthly inflow lowest since Dec 2020, clocks in at $141mn in Nov

Another audio, purportedly of Bushra Bibi discussing ‘sale of watches’, surfaces

Modi’s party set for landslide election win in India’s Gujarat state

China buys Russian oil at multi-month low discounts, brushes off price cap

Israeli forces kill 3 Palestinians in West Bank: Palestinian ministry