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KARACHI: Foreign Direct Investment (FDI) posted a decline of 29 percent during the last fiscal year (FY21) as Chinese investment in projects registered a massive fall.

The State Bank of Pakistan (SBP) reported on Friday that foreign investors invested some $1.847 billion in Pakistan on account of FDI during the July-June of FY21 compared to $2.597 billion in same period of the last fiscal year (FY20), depicting a decline of $750 million. During the period under review, the country fetched FDI inflows amounted to $3.01 billion against the outflow of $1.163 million. A massive fall in the FDI has been attributed mainly to a notable decline in the Chinese investment in CPEC-related projects. According to the SBP statistics, net FDI from China decreased by 10 percent to $758 million in FY21 compared with $847 million FDI in FY20.

Despite decline in investment, with 41 percent share China is still ranked first in the foreign direct investment. In addition, Hong Kong is the second largest investing country with an investment of $157 million and the United State ranked third with $155 million foreign direct investment in Pakistan.

Similarly, with improved equity market performance, Portfolio Investment (PI) witnessed a healthy growth of 175 during the last fiscal year. PI stood at $211.5 million during July-June of FY21 as against outflow of $ 282 million during July-June of FY20.

Month on Month basis, Pakistan fetched FDI amounted to $135.4 million in June 2021 versus $175 million in June 2020, depicting a decline of 23 percent or $40 million. During June 2021, FDI inflows were $211 million as against outflows were $76 million.

Total foreign investment in Pakistan, comprising foreign direct investment, portfolio investment and foreign public investment rose by 122.4 percent during the last fiscal year. Pakistan's total foreign investment reached $4.614 billion mark in FY21 compared to some $ 2.074 billion in FY20, showing an increase of $2.539 billion.

The main reason behind the surge in overall foreign investment is due to massive foreign public investment of $2.55 billion in the last fiscal year.

Copyright Business Recorder, 2021

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