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KARACHI: Foreign Direct Investment (FDI) has shown a sign of improvement after a long time as inflows improved 10 per cent year-on-year to cross the $1 billion mark in July-Dec.
The overall investment increased 52pc to $1.82bn for the period under review. However, this increase was achieved by including the money borrowed through the Eurobond floated by the government.
The State Bank of Pakistan (SBP) reported on Monday that FDI in July-Dec amounted to $1.08bn, showing annual growth of 10.4pc.
FDI has been declining for the last three years despite regular investments from China. However, Netherlands changed the trend with a massive investment in December.
According to the SBP report, Netherlands invested $459.5 million in December alone, which pushed up the FDI figure for the six-month period and showed positive year-on-year growth.
In December, the net inflow of FDI was $595m. China and the United Arab Emirates (UAE) contributed FDI amounting to $47.6m and $45.6m, respectively.
The inflow in December made the real change as it accounted for 55pc of total FDI during the six months. Data shows that FDI for the first five months (July-Nov) was less than the investment recorded in December alone, which was dominated by the inflow from the Netherlands.
The inflow from China, which is the main partner of the country under the China-Pakistan Economic Corridor (CPEC), in the six months remained $204m. The inflow from the Netherlands during the same period was $462m.
Collective inflows from the two countries were 61pc of total FDI received in the first six months of the current fiscal year. FDI is coming from a handful of countries, which indicates that the country is still not attractive for international investors.
Research reports issued by analysts show the investment outlook has improved, particularly with the improvement in law and order. However, corruption remains a major hurdle to foreign investment.
FDI from the United States grew to $38m compared to the net outflow of $44m a year ago. The investment from Britain fell 50pc to 44m in the six months.
Turkey was the third largest investor in Pakistan with a total investment of $129m. Other important investors were the UAE ($77m) and France (46m).
The half-yearly report is encouraging for the country’s economic managers who have been struggling to attract FDI. The finance minister and his team have been asserting that the CPEC is a game-changer. But analysts believe that inflows from China are still not encouraging.
The government also came under fire for showing borrowing through the Eurobond as investment.
Published in Dawn, January 17th, 2017
Comments (14) Closed
Pakistan is a country ripe for investment and with the right policies and end to corruption can become a bigger regional player
If we leave Netherlands's investment for a while, where is CPEC in our FDI? According to government claims, some $16 billion has been invested by China under CPEC projects so far.If these are loans as feared by many experts then what game is supposed to be changed by this project?
Thanks PMLN its only due to their efforts.
"However, this increase was achieved by including the money borrowed through the Eurobond floated by the government."Borrowed money cant be included as FDI.Seems govt just wants to paint rosy picture of economics.
Pakistan is a hidden gem for investors. We should hold a Silk Route exhibition and re-introduce and re-market Pakistan to introduce the country as a wonderful economy to invest in. China, Netherlands and the UAE lead the pack, its only a matter of time before other countries and Pakistanis themselves realize the true business potential of Pakistan!
This is the best ....confidence building ...news ! Let it grow leaps & bound from more countries so China will be well balanced !
Excellent Pakistan is moving forward against all the odds
FDI in Pakistan can be enormous provided the government allows the establishment of free market economy without excessive government controls and without government interference. Secondly, remove all frivolous taxes such as withholding taxes and custom duties etc. - Just have a simplified 10% across the board income tax on individual or corporate incomes. These basic government steps shall allow Pakistan to achieve its economic potential.
Enthusiasts. Hold your horses..The investment from Netherlands was the price theNetherlands-based Friesland Campina paid amounting to $460m pertaining to acquisition transaction of Engro Foods Limited.
@viv the chinese projects are currently mostly in the loan stage. the FDI stage is to begin later this year..
PML-N will twist facts and figures to show they are doing a great job. Beware Pakistanis!
After CPEC you can see all the 193 countries of UN will be in queue to invest in pakisthan. We should ignore India, Bangala and Afghanistan while receiving FDI...
@PAssion
As they should. Development done any government should take credit. Too bad you cannot say the same about PTI in Pukhtunkhwa, it is the party of empty slogans, ONLY SLOGANS. They promise big and deliver NOTHING.
@HAMZA KHAN Just so you know, FDI is almost always a loan. It is an investment and the investor seeks profit out of it in addition to the initial amount. It is really if the country has the chops to make the best use of that investment period to boost economy so that the outflow is not an impact which essentially means it was beneficial to both. Otherwise you will simply end up paying the loan back with interest.There will be no FDI uptick from China only new loans so don't have your hopes up too high.