KARACHI: Foreign direct investment (FDI) fell 48 per cent year-on-year in the first four months of the fiscal year to $316.1 million, the State Bank of Pakistan (SBP) said on Tuesday.

But an increased foreign portfolio investment changed the overall position as total foreign investment jumped by 48pc in this period.

The foreign investment of $1 billion in sukuk was included as foreign public investment, which improved the country’s foreign investment profile.

However, the real investment or FDI dropped $294m in July-Oct on an annual basis. FDI has been falling for the last many years and the present government has not been able to bring any positive change.

Independent economists have accused the government of pushing the country into isolation, which is visible from declining foreign investment.

In contrast, Chinese investment claims a big chunk within the FDI pie, which shows that Pakistan depends largely on China for foreign inflows.

Though Chinese FDI has declined substantially in the four-month period, it is still the top foreign investor with $146m or 46pc of entire FDI. China invested $276m in the same period of the last fiscal year.

Analysts believe most countries have lost interest in Pakistan. Only a few nations are investing in Pakistan, but most of these investments are one-off inflows. The United States invested $64m in the four-month period against $51m that it withdrew during the same period of the last fiscal year.

FDI from the United Kingdom and the United Arab Emirates dropped 42pc and 17pc, respectively, during the period under review. There is no significant investment from any other country in Pakistan.

The government cites many reasons for declining foreign investments.

But its failure on this front has led to serious questions about the international isolation of Pakistan. To hide its failure, the government has been emphasising that the Chinese investment is the real game-changer in both Pakistan and the overall region.

Declining exports and dwindling remittances have already forced the government to borrow from the international market, which seems to be the only available option to service foreign debt accumulated in past years.

As for the proceeds of the sukuk auction held at the end of September that apparently improved the overall picture of foreign investment in Pakistan, analysts said such inflows should not be confused with FDI.

The government has recently announced that it will borrow another $500m through sukuk.

Published in Dawn, November 16th, 2016