KARACHI: Foreign direct investment (FDI) increased by 47 per cent in the first four months of this fiscal year, mainly because of a big inflow from China.

The State Bank reported on Monday that the country received $423 million during July-October compared to $288m during the same period of last year.

The inflows posted a sudden increase in October, turning around a year-on-year fall of 26pc in July-September quarter to a 47pc rise in the four-month period.

Pakistan received just $169m as foreign direct investment in the first quarter. The inflows in October alone amounted to $252m.

However, the main inflow which changed the depressing situation was from China which invested $163m out of the total $423m. The government has been making efforts to bring Chinese investment in the country. Prime Minister Nawaz Sharif recently signed memoranda of understanding (MoUs) with Chinese companies for $42 billion investment here.

The United States and Hong Kong were other two countries who made significant investment of $75.2m and $74.6m, respectively.

Despite this sudden jump in October the overall situation is still unattractive since the size of FDI is extremely poor.

The overall FDI inflows and outflows during July-October were also surprising since both were very high in numbers. The inflows were $1.390 billion (112pc higher year-on-year) and outflows were $966m (up 163pc).

Portfolio investment in this period also showed positive sign increasing by 144pc to $176m compared to only $72m in the same period of last year. However, foreign portfolio fell by 143pc during the four months. It was $69m during the same period last year while this year it was negative $29m.

Pakistan has been waiting for more than seven years for improvement in the FDI but the country hit by terrorism could not convince the foreign investors so far. The FY14 was better with FDI inflows of $2.3bn than FY13 when the figure was $1.57bn.

Published in Dawn, November 18th , 2014