Foreign Direct Investment (FDI) posted a decline of 3 percent during the first quarter of this fiscal year (FY20) owing to lower inflows from China.
According to the State Bank of Pakistan (SBP), the country fetched FDI amounting to $ 542 million in July-September of FY20 compared to $ 559.4 million in the same period of last fiscal year (FY19), depicting a decline of $ 17.3 million. During the period under review, FDI inflows stood at $ 763 million against the outflow of $ 221 million.
The detailed analysis revealed that Chinese investment in Pakistan has drastically fell by 226 percent during this fiscal year as leading projects under the CPEC have been completed. Chinese investment in Pakistan fell to $103 million in first quarter of FY20 down from $ 336 million in the same period of FY19.
Economists said that foreign investors are still reluctant to invest in Pakistan due to political uncertainly and adopted a wait and see policy. After the recent visit of Prime Minister Imran Khan to China, economists are expecting that Chinese investment in CPEC projects would surge in future.
Month-on-month basis, FDI increased by 111 percent to $ 385.3 million in September 2019 supported by a massive investment from Norway, which invested $ 253.2 million in September 2019.
The second segment of foreign investment, ie, portfolio investment, is gradually improving and witnessed an increase of 112 percent during the first quarter of this fiscal year. Portfolio investment stood at $ 22.7 million in Jul-September of FY20 against an outflow of $ 185.3 million in the corresponding period of last fiscal year.
Total foreign investment in Pakistan registered an increase of 137 percent or $ 512.4 million to $ 887 million in first quarter of this fiscal year compared to $ 374 million in the same period of last fiscal year.
Copyright Business Recorder, 2019
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