KARACHI: Foreign direct investment (FDI) increased by 7.5 per cent in the first two months of this fiscal year, but it was mainly on account of China. Other countries either invested poorly or withdrew their investments.

Though the FDI increased, it indicated a negative sign since countries investing in Pakistan further cut their investment, and FDI now dominantly depends on China.

The State Bank’s latest report shows that FDI stood at $119.3 million during July-August period of this fiscal year compared to $110.9m in the same period of last year.

The increase was insignificant, but the Chinese investment of $131.5m was more than the net investment during the two months under review.

The net investment fell because of massive disinvestment of $96.7m by the United States. The US invested $45m during the same period of last fiscal year which was the highest among other countries.

Pakistan has been struggling hard to invite foreign investment, but investment is declining each year. In the last fiscal year, FDI fell to only $851m while it was $1698m in 2014-15, reflecting poor response from global investors. The two-month trend seems positive for the country, but the amount is still not significant.

United Arab Emirates made $30m investment, while the same country invested $35m during the two months of the last fiscal year.

Saudi Arabia, which is the main country for remittances for Pakistan, disinvested $21m during the two months of this fiscal year. The country had disinvested $10.6m during the same period of last fiscal year.

Details show that the only positive development was the increased Chinese investment in the new fiscal year, while there was a zero investment of China during the same period of last fiscal year.

Experts believe that sustainable and prolonged peace could pave the way for foreign investment in the country. Pakistan receives the lowest amount of FDI in the region.

What is more discouraging is the poor response from domestic investors. Domestic investment is also at the rock bottom level while a number of tycoons have invested abroad.

Investment of black money in Dubai from Pakistan also signals that Pakistan is not attractive for such investors.

Published in Dawn, September 16th, 2015

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