KARACHI: Foreign direct investment (FDI) increased 4.6 per cent to $2.41 billion in 2016-17, data released by the State Bank of Pakistan (SBP) showed on Monday.

FDI in the last fiscal year was the highest since the PML-N government came to power four years ago. It was $1.45bn in 2012-13 and fell to $988 million in 2014-15. It improved to $2.3bn in 2015-16 and inched up further to reach the eight-year high in 2016-17.

China emerged as the top investor during the last three years with the onset of the China-Pakistan Economic Corridor (CPEC).

FDI from China in 2016-17 was $1.18bn, almost half of the total inflows received throughout the year. Growing investment from China is giving rise to both fears and hopes. The government expects the CPEC will stabilise the economy in the long run as its large-scale projects bear fruit.

China emerged as top investor in last three years

A Dutch company bought a majority stake in Engro Foods for $463m, which made Netherlands the second biggest foreign investor. The country had invested just $30m in 2015-16.

Turkey invested $135m, France $119m, United States $71m and United Kingdom $69m.

The United Kingdom invested $151.6m in 2015-16, but its FDI dropped over 50pc in 2016-17. FDI from the United States increased to $71m against just $13m in 2015-16.

Inflows from Arab counties remained small despite a significant volume of bilateral trade.

According to the SBP, overall foreign private investment declined 5.3pc to $1.88bn compared to $1.98bn a year ago. Portfolio investment witnessed an outflow of $531m compared to the outflow of $320m a year ago.

Compared to regional countries, Pakistan has been receiving smaller FDI over the years. According to one published report, India received $62bn while China attracted $59bn in 2016.

Pakistan’s current account deficit for the first 11 months of 2016-17 amounted to $10.6bn. In contrast, the country attracted FDI to the tune of $8.86bn in the last five years.

Published in Dawn, July 18th, 2017