KARACHI: Foreign direct investment (FDI) jumped 163 per cent to $222.6 million in July on a year-on-year basis, the State Bank of Pakistan (SBP) reported on Wednesday.

FDI continued showing the upward trend that began in the second half of the preceding fiscal year. It grew 4.6pc in 2016-17.

Pakistan received $2.4 billion in 2016-17, highest since the present government came into power four years ago. FDI was $1.45bn in 2012-13.

Growth in FDI is encouraging, although the main contributor to net inflows has been China, which is investing heavily under the China-Pakistan Economic Corridor (CPEC).

Malaysia, China were biggest foreign investors in July

The highest inflow in July was from Malaysia, which invested $91.6m. It was followed by China that invested $72.7m. Other important sources of FDI in July were the United Arab Emirates and Japan, which contributed $16.2m and $12.2m, respectively.

Trade emerged as the most attractive avenue for foreign investors who contributed $93.9m in July to this sector. The power sector has also been attractive for foreign investors. It received $56.5m during July. Within the power sector, investment in coal projects was $41m.

The SBP report indicated that the construction sector maintained its attraction for foreign investors in July despite political upheavals. FDI in the construction sector was $20m in July against $1.4m a year ago.

The oil and gas exploration sector attracted FDI worth $20m in July. The sector has lost attraction for investors as it offers lower profits due to low oil prices worldwide.

Foreign portfolio investment registered a net outflow of $11.4m in July. However, portfolio investment from the United States during the month was $100.5m while that from China was only $3.7m.

Heavy withdrawals by many countries resulted in net outflows. The biggest withdrawal was from Hong Kong ($36.2m), followed by Luxemburg ($21.9m) and the United Kingdom ($17.8m).

The equity market has suffered in recent weeks because of political uncertainty. Portfolio investment can see a further drop in the near future.

Published in Dawn, August 17th, 2017

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