FDI Drops by $755 Million in Nine Months of Current Fiscal Year

Foreign Direct Investment (FDI) in Pakistan has gone down by 35 percent, or $755 million, year-over-year, according to the latest data released by the State Bank of Pakistan (SBP).

FDI has been constantly deteriorating during the first nine months of this fiscal year (FY21). During July-March of FY21, foreign investors brought approximately $1.395 billion in Pakistan on account of FDI compared to $2.15 billion in the same period of the last fiscal year (FY20).

During the period under review, the country fetched FDI inflows amounted to $2.268 billion as against an outflow of $873 million, SBP data showed.

While part of this decline can be largely attributed to the extended virus fallout, a major chunk of the decline in FDI compared to last year can be traced to decreased inflows from China. Net FDI from China went down by 24 percent to $651 million in the period under discussion, down from $859 million in the previous fiscal year.

This is despite the fact that China continues to be the biggest contributor of FDI to Pakistan even this year. Hong Kong is the second largest investing country with an investment of $106 million, with the UK being third in the loss with $105 million FDI to Pakistan.

FDI inflows from China, Hong Kong, and the Netherlands fell compared to a year earlier, and those from the United Kingdom increased in July-March FY2021, SBP figures revealed.

On a monthly comparison, FDI in March 2021 clocked in at $168 million versus $279 million in March 2020, depicting a decline of 40 percent or $111 million.

Portfolio Investment (PI) also showed negative growth with a net outflow of $265 million during July-March 2021. Total foreign investment in Pakistan, comprising foreign direct investment, portfolio investment, and foreign public investment, fell 52 percent during the first nine months of the current fiscal year.

Pakistan’s total foreign investment declined to $1.126 billion in July-March of FY21 compared to some $2.377 billion in the same period of FY20, showing a decline of $1.25 billion.

With respect to different economic segments, the power sector was the largest recipient of FDI, with total investment registering at $737.8 million in July-March FY2021, down from $742.4 million a year ago.

Oil and gas explorations inflows were $158.3 million in July-March FY2021, down from $218.3 million a year earlier.

The telecommunications sector pulled $62.6 million FDI, compared with an inflow of $464.8 million last year. FDI in financial businesses also fell to $192.1 million, from $210.5 million.

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