FDI rises, but remains dependent on China
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KARACHI: The foreign direct investment (FDI) rose eight per cent to $216 million in the first quarter (July-September) of this fiscal year from $200m a year earlier, the State Bank of Pakistan said on Thursday.
However, 88pc ($190m) of these inflows were from China which indicates that Pakistan has yet to appear on the investment map of private investors despite a spike in foreign exchange reserves to $20 billion.
Analysts believe the domination of a single country in FDI inflows could have negative consequences as it would make Pakistan dependent on China.
Another important development was the disinvestment by the United States — the country withdrew about $103m during the first quarter. This heavy withdrawal undermined the other investments like $33m from the United Kingdom, $49m from the United Arab Emirates and $28m from Switzerland during the quarter.
The SBP reported that the overall foreign private investment in July-September fell by 68pc to $116m from $370m in the same quarter of last fiscal year, mainly because of a massive fall in the portfolio investment which plunged to negative $99.7m from $170m a year ago.
The government, which has completed half of its five-year term, has been unable to improve the scenario for investments.
The poor investment climate was also visible at the time of latest Eurobond offer. The government sold $500m Eurobonds last month at a very high rate of 8.25pc, but still failed to attract investors the way it had attracted in the previous offer.
Published in Dawn, October 16th, 2015
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Comments (42) Closed
Oct 16, 2015 07:23am
Aren't we already heavily dependent on China for most things anyways?
Want to be independent? - then it cannot be specific only to FDI.
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Oct 16, 2015 07:57am
It proves that Pak was doing economically better with cordial relations with India. Dependency would put militarily very strong China in dominant blackmailing role and with no support from India & Afghanistan, other neighbors Pakistan would be reduced to a very negligent role. withdrawal of assistance by US and China would make Pakistan bankrupt. Pakistani for their better future & economic growth must ensure peace & lasting solutions with India without any further delay converting existing LoC as IB.
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Oct 16, 2015 08:08am
Earlier they said Eurobond was very successful. Now it is otherway. Why US , UK and UAE are pulling out inspite of getting good rating from agencies? Everything is fishy. No independnt Auditors.
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Oct 16, 2015 08:09am
Too late to worry about it now. Leave it all to the economists. Finish off the Taliban and the criminals. Back NAB. Hire more auditors. Convict and jail government thieves. Make Pakistan a safer place for foreign investment and business.
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Oct 16, 2015 08:52am
But focus is on Kashmir
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Oct 16, 2015 09:08am
And as Chinese economy is in trouble now everybody in government will start blaming it for low FDI in the coming years. And what is the benefit of repeated visits of PM and ministers to US US if it disinvested from Pakistan
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Oct 16, 2015 09:25am
Better to say CDI (Chinese direct Investment) instead of FDI.
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Oct 16, 2015 09:30am
Just two comment shows that Pakistani people are economically illiterate.
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Oct 16, 2015 09:39am
India received $31 Billion in just 6 months in 2015 whereas pakistan in 3 months received only $216 million. This shows how far India has gone ahead.
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Oct 16, 2015 10:29am
@Critical .Thats the biggest prob we face everyday.every one is interested in politics but when it comes to economic konwledge they have no idea and worse is they dont want to learn as well.
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Oct 16, 2015 11:13am
This is amazing. If this article would have been about America bashing we Pakistani's would have hundreds of comments here invoking all kinds of conspiracy theories. But since America bashing is not involved, we don't care!
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Oct 16, 2015 12:39pm
pathetic. India received 30 billions dollars as FDI in first six month s. with calculation, this amount is 70 times greater than FDI in Pakistan. this is difference. Pakistan is dwindling.
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Oct 16, 2015 01:31pm
@abdullah : That is because politics is easy. You can say anything (something that does not even make sense) and still be right. Commenting on economics requires some knowledge. Commenting on science more so.
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Oct 16, 2015 01:34pm
A dollar denominated rate of 8.25% is too high and unsustainable. Anything above 3% to 4% is high. As such a high rate even takes away the freedom to depreciate the exchange rate, which is the need of the hour to reduce unnecessary imports.
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Oct 16, 2015 01:51pm
Look at the disparity among us, India is at 360 + billion reserve. A largest imported & consumer of gold globally. Fortune 500 global co. have R&D / Manufacture unit in India. A number one FDI destination during H1, 2015 globally
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Oct 16, 2015 02:07pm
@SACHIN True.
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Oct 16, 2015 02:08pm
@RL, u got it wrong i guess,
"The foreign direct investment (FDI) rose eight per cent to $216 million in the first quarter (July-September) of this fiscal year from $200m a year earlier", so net addition in the three months is 16 million$
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Oct 16, 2015 02:26pm
Wasn't Pakistan previously heavily dependant on some other countries ?
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Oct 16, 2015 02:29pm
@Just Someone Me think. One of the greatest scientists of all - Aristotle - commented on almost everything. And now, almost all of his theories have been proven wrong.
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Oct 16, 2015 02:30pm
@RL And India is happy about that ? We are happy too.
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Oct 16, 2015 04:18pm
FDI in one quarter is USD 200 Million so overall in a year 800 million. India was at 32 Billion. Forex reserves USD 20 Billion, India at USD 325 Billion. I think Pakistan is in great trouble.
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Oct 16, 2015 05:10pm
@Taimur Nobody comes and invests for charity. They will come if they can make profits with their investments. Even China also will be investing if it is profitable. No free lunch.
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Oct 16, 2015 06:18pm
@rs Exactly! But unfortunately the Pakistani policy makers don't realize the ground reality; they used to feel free to make foreign tours a lots at the costs of hard currencies instead of getting self reliant on its own since the inception of 1947.
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Oct 16, 2015 06:37pm
This is called Global Isolation. China is not a fool to invest in Pakistan. Its plan is something else. And the amount invested is peanuts for them.
More than the investments coming from China, the investments that are leaving is more alarming. Did Government trying to understand the reason for such capital flight?
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Oct 16, 2015 07:23pm
@rs how it is possible buddy that only China can see profits and others are dumb.....China's only profit lies in containing India in SEA.
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Oct 16, 2015 07:46pm
Sale weapons to all countries to become rich
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Oct 16, 2015 08:00pm
One point missing :- China is investing in Pakistan by taking loan from Pakistani banks itself thereby reducing lending capacity of banks to needful Pakistani entrepreneurs, MSME and farmers/ artisans resulting in reduced productivity of Pakistan and its competitiveness.
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Oct 16, 2015 08:06pm
@Zeeshan so true. People love their hearts more than their brains.
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Oct 16, 2015 09:28pm
@RL And right on the queue, the annoying Indian wants to bring India into discussion where it's not even mentioned.
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Oct 16, 2015 09:30pm
I would like to see all the PMLN supporters shouting out so loud the other day. Please explain this now. Keep electing PMLN and expecting different result ... won't happen.
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Oct 16, 2015 09:47pm
@Ramesh Nakhwa And India's economy is 2 trillion while China is 11 trillion dollars. So what is your point?
And since you bring India into discussion where it is not even mentioned ... what good are all those billions when 600 million poor Indians live without access to clean water and defecating on the streets.
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Oct 17, 2015 01:02am
Pakistan soon going to have South american experience
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Oct 17, 2015 01:23am
All eggs in one basket is not a good idea in business?
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Oct 17, 2015 01:34am
What's the difference, first US now China. The government needs to stop corruption and then see economics get better.
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Oct 17, 2015 02:27am
@naveen .I am an indian and glad to know that India received $x billion in FDI.But we should be humble about our achievements.As a Indian I would wish our neighbours follow through with similar success and there is peace and prosperity in the sub continent. As a country our basic problems arent very different from that of Pakistan. Human to human contact needs to improve without hatered and suspicion.Businesses and start up companies should increase in both countries creating employment opportunity for common indians and pakistanis. I would never wish this happens but if Pakistan losses its FDI and has an economic meltdown, its effect will not leave India untouched. Thats the reality of globalization all our economies are inter-related. Best analogy is of real estate,If your beautiful expensive house is in a slum area, its foolish of you to expect a very high price in return. My 2 cents.
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Oct 17, 2015 05:01am
It's a shameful statistic but hardly surprising. When you are considered a state where no law an order exist, education and health are the lowest priority and you spend a major chunk of your brain bank in copying Chinese and Korean armaments, how can one ever hope to make oneself an attractive proposition for investors. It's a matter of time, when this all brings curtains to the dreams for which the nation was created. I hope dawn editors show the courage to display my comments. It's time for introspection guys.
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Oct 17, 2015 05:24am
what in the world are you trying to do Mr. Sharif
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Oct 17, 2015 06:21am
Why only China investing more in Pakistan .. Think people. It is the indirect way of controlling Pakistan against to India. China economy itself falling then what about yours if they invest more here.
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Oct 17, 2015 06:25am
Instead of fighting for land,you should concentrate on your economy like India. Where ever modi goes he is talking about investments and make in India but where ever Nawaz goes he is talking about kashmir issue. What will you get from that for your homeland development? Time to think and raise questions
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Oct 17, 2015 06:26am
No body I said no body earn profit by doing business with china,they are masters in selling anything which can be sell,from Diwali fire crackers to id topees they sell at cheapest rates.
Pakistan logically can earn much more by doing business with India and same applies for India but but but they are after all India Pakistan (Jung to bantee hai)
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Oct 17, 2015 05:15pm
I Think Pak Has A Capability To Start New Economic Boom... With The Help of Closer India.. Not Russia...
With $31 billion of foreign capital inflows, India
has surpassed China and the US
to take the pole position in
attracting largest FDI in the
first half of 2015. The Finance Ministry forwarded a report
published in Financial Times,
London, that said "India grabs
investment league pole
position." The report said India has
attracted $31 billion of FDI in
H1 2015, ahead of $28 billion of
China and $27 billion of US. "A ranking of the top
destinations for greenfield
investment (measured by
estimated capital expenditure)
in the first half of 2015 shows
India at number one., having attracted roughly $3 billion
more than China and $4 billion
more than the US," the FT
report said.
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Oct 17, 2015 10:10pm
That is not called FDI. It is called CDI.
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