FDI drops 20% in April, amounts to $143.7 million

The power sector attracted the largest amount of FDI with a cumulative net inflow of $749.9 millionPHOTO: EXPRESS

The power sector attracted the largest amount of FDI with a cumulative net inflow of $749.9 million

KARACHI: Foreign direct investment (FDI) in Pakistan decreased to $143.7 million in April 2018, down 20% compared with the $179.7 million in the same month of the previous year.

The drop comes apparently due to a pickup in political noise ahead of the general elections to be held later this year.

FDI grows 132% to $340.8m as China dominates

However, on a cumulative basis, FDI increased 2.4% in July-April, amounting to $2.24 billion from $2.18 billion in the same 10-month period the previous year.

According to data released on Tuesday by the State Bank of Pakistan (SBP), the country witnessed an inflow of FDI amounting to $2.8 billion in the 10-month period, against an outflow of $565.8 million in the same period of the previous year.

China continued to lead the pack in terms of net investment in Pakistan with a cumulative FDI of $1.414 billion in the 10-month period. UK was the second-largest contributor in terms of net FDI with a tally of $244.5 million in the 10-month period, followed by Malaysia (net FDI of $123.5 million).

Pakistan visible on foreign investors’ radar

US with a net FDI of $81.6 million. Switzerland, the Netherlands and Hungary were the next largest contributors of FDI in the 10-month period with net investment of $72 million, $61.4 million and $59.1 million, respectively.

Understandably, the power sector attracted the largest amount of FDI with a cumulative net inflow of $749.9 million. With power projects under the China-Pakistan Economic Corridor (CPEC) moving ahead at full throttle, the sector has been a beneficiary in terms of attracting investment from China.

Construction was second in terms of sector with FDI of $560.8 million, followed by financial business ($271.5 million) and oil and gas exploration ($164.9 million).

FDI expected to surge 60% in Pakistan

Chinese companies are taking a keen interest in the Pakistani economy, which has grown at its fastest pace in more than a decade, registering a projected GDP growth rate of 5.8% in 2017-18, according to official figures.

With CPEC and heavy investments planned along the corridor, experts believe Pakistan will continue to attract inflows from China as construction picks up pace in the next few months.

Published in The Express Tribune, May 16th, 2018.

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