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Foreign direct investment grows by 57pc


12/16/2017

KARACHI: Foreign direct investment (FDI) increased 57.2 per cent year-on-year to $1.14 billion in the first five months of 2017-18.

FDI was dominated by China as its share was 73pc in total inflows, according to data released by the State Bank of Pakistan (SBP) on Friday.
 
It was $729 million in the comparable five-month period of 2016-17.
 
Rising FDI is a good sign amidst dwindling foreign exchange reserves. The government recently raised $2.5 billion by auctioning bonds in the international market to improve its reserves.
 
SBP data showed the power sector received $539m, highest among all sectors, during the five months against an inflow of $214m a year ago.
 
The construction sector received an inflow of $271m compared to just $39m in the same period of the preceding fiscal year.
 
The oil and gas exploration sector attracted $74m against $57m a year ago. Inflows to the financial businesses witnessed a decline as foreign investment amounted to $75m against $91m last year.
 
It is a good sign that China has been increasing its investment in Pakistan. But at the same time, it also indicates that inflows from countries other than China have decreased. This means Pakistan’s reliance on China for investment has been growing.
 
FDI from the largest Asian economy rose to $840m from $224m a year ago. Most of Chinese investments are under the China-Pakistan Economic Corridor.
 
More surprisingly, inflows from the United States jumped to $471m during the five months in contrast to an outflow of $5m a year ago. The change is surprising in the wake of deteriorating relations with the United States in recent months.
 
Malaysia was the third biggest foreign investor. Its FDI was $112m compared to $4m in the same period of the last fiscal year.
 
The SBP reported that the overall foreign private investment, including portfolio investment, increased 66pc to over a billion dollars during the period under review. Portfolio investment noted an outflow $96m, registering little change from a year ago.
 
Pakistan has been struggling to attract foreign investment, particularly from Arab counties, but its attempts have largely been futile. This is despite the fact that bilateral trade with Gulf countries has been growing and is mostly in their favour.
 
Source: Dawn