ANL 16.20 Decreased By ▼ -0.18 (-1.1%)
ASC 14.63 Increased By ▲ 0.95 (6.94%)
ASL 20.04 Decreased By ▼ -0.41 (-2%)
BOP 8.55 Decreased By ▼ -0.05 (-0.58%)
BYCO 7.53 Increased By ▲ 0.24 (3.29%)
FCCL 17.50 Increased By ▲ 0.11 (0.63%)
FFBL 23.15 Increased By ▲ 1.68 (7.82%)
FFL 15.25 Increased By ▲ 0.35 (2.35%)
FNEL 7.35 Increased By ▲ 0.05 (0.68%)
GGGL 17.15 Increased By ▲ 0.74 (4.51%)
GGL 29.95 Increased By ▲ 0.10 (0.34%)
HUMNL 5.96 Increased By ▲ 0.17 (2.94%)
JSCL 20.68 Increased By ▲ 0.28 (1.37%)
KAPCO 28.99 Increased By ▲ 0.31 (1.08%)
KEL 3.48 Increased By ▲ 0.03 (0.87%)
MDTL 2.11 Decreased By ▼ -0.09 (-4.09%)
MLCF 33.60 Increased By ▲ 0.18 (0.54%)
NETSOL 106.00 Decreased By ▼ -1.55 (-1.44%)
PACE 4.33 Decreased By ▼ -0.17 (-3.78%)
PAEL 27.95 Increased By ▲ 0.75 (2.76%)
PIBTL 8.70 Increased By ▲ 0.10 (1.16%)
POWER 6.90 Decreased By ▼ -0.03 (-0.43%)
PRL 17.18 Increased By ▲ 0.87 (5.33%)
PTC 9.30 Increased By ▲ 0.12 (1.31%)
SILK 1.44 No Change ▼ 0.00 (0%)
SNGP 42.33 Increased By ▲ 0.27 (0.64%)
TELE 16.45 Decreased By ▼ -0.09 (-0.54%)
TRG 135.78 Decreased By ▼ -2.22 (-1.61%)
UNITY 29.90 Increased By ▲ 1.40 (4.91%)
WTL 2.40 Decreased By ▼ -0.05 (-2.04%)
BR100 4,668 Increased By ▲ 50.21 (1.09%)
BR30 20,892 Increased By ▲ 107.28 (0.52%)
KSE100 44,822 Increased By ▲ 487.85 (1.1%)
KSE30 17,521 Increased By ▲ 178.45 (1.03%)

Coronavirus
LOW Source: covid.gov.pk
Pakistan Deaths
28,252
2424hr
Pakistan Cases
1,263,664
89324hr
1.7% positivity
Sindh
465,175
Punjab
437,572
Balochistan
33,114
Islamabad
106,402
KPK
176,650

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.