In the first four months of the current fiscal year, foreign direct investment rose 9.1% to $733.1 million as the troubled power industry continued to draw funds for its untapped potential.
Data from the State Bank of Pakistan (SBP) showed that FDI in the same period a year earlier amounted to $672 million. In the first phase of the China-Pakistan Economic Corridor (CPEC) framework, foreign inflows increased largely as a result of Chinese firms’ consistent investment in energy and infrastructure projects.
China’s FDI stood at 332.3 million dollars, compared to 64.3 million a year earlier. In the first four months of this fiscal year the power sector earned $352.3 million. Analysts said that the new law to replace the defunct CPEC authority order, the steps taken by the central bank and the pick-up of post-lockdown economic activity are likely to further raise domestic investment during the current fiscal year.
The lockdown relapse, however may damage the confidence of the foreign investor, they said. Last month, the SBP launched a new mechanism to enable Pakistani companies to remit disinvestment proceeds conveniently to their foreign shareholders. The aim of this initiative is to make the country a more desirable investment location by growing the confidence of investors and promoting the ease of doing business.
Inflows from the Netherlands in July-October FY2021 increased from $22.5 million a year earlier to $51.5 million. Net FDI flows from Malta, however, stayed flat in the period under review at $74.1 million.
The country attracted $317.4 million in FDI in October, a hefty 151 percent increase from the corresponding month a year earlier. Last year, FDI stood at $126.5 million in October. In the month of October alone, Chinese investment reached $228.7 million in Pakistan.
Financial companies saw an improvement in FDI inflows between July and October. In this field, direct investment grew from $44.9 million to $118.5 million. In the oil and gas production market, foreign companies spent $83.1 million compared with $75.1 million a year earlier.
In July-October FY2021, the SBP’s figures showed that outflows from the stock market stood at $145.6 million versus inflows of $15.6 million a year earlier. Foreigners sold $162 million worth of government securities such as treasury bills and Pakistan Investment Bonds in July-October. The country saw an aggressive buying of $436.7 million in the corresponding period last year. Total foreign investment fell 62.2 percent to $425.5 million.