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KARACHI: Foreign direct investment (FDI) fell 2.8 per cent to $1.38 billion in the first half of 2017-18, although inflows from China rose 2.4 times, the State Bank of Pakistan reported on Tuesday.
Data showed the pattern of inflows significantly changed recently. China now dominates FDI with a share of more than two-thirds in total investments.
Beijing emerged first as the largest trading partner of Islamabad and now it has become the top foreign investor. Inflows from countries other than China have come down drastically over the same period.
FDI from China was $969 million during the six months, which constituted 70pc of total inflows. In the same period of the preceding fiscal year, investment from China amounted to $393m and constituted 27.6pc of total inflows.
This should be a matter of concern for economic managers as most countries seem to shy away from investing in Pakistan. Data showed FDI in December was significantly lower than the investment in the same month of 2016. Pakistan received $197m last month compared to $692.5m a year ago.
The unusual spike in FDI in December 2016 was because of the inflow of $459m from Netherlands as a Dutch company acquired majority shares in Engro Foods in a one-off transaction.
The only other country that invested more than $100m in July-December was Malaysia. Its investment during the six months was $117m against $13.1m a year ago.
Other significant investors were the United Kingdom, United States and Hungary, which invested $77m, $63m and $48m, respectively.
Pakistan enjoys good relations with Arab countries. Yet the government could not find potential investors in the Gulf region.
The UAE is the second biggest trading partner of Pakistan, but its direct investment was just $14.5m during the six months.
Published in Dawn, January 17th, 2018
Comments (9) Closed
Not a good trend.
StrAnge?
Pakistan should seriously find its priorities..
Mostly due to Pak-US ties. The drop is larger considering rise in Chinese investment.
Our country needs to prove worthiness to outsiders. No one would like to risk their money in the country where Political and Social chaos is Normal.
Who will not be scared of the news having bombing and attacks on security forces almost every alternate day?
The thinking should be from bottom up. We can't expect to see it trickling down with this kind of top level people who thinks nothing but their own interests.
If it means that only China is investing in Pakistan and not other countries.... consequences can be very bad for Pakistan, which is a country rich in resources, both human and natural. If only it is allowed to develop freely.....
FDI and loans are not same.You don't pay interest on FDI.
@NORMAL agree.no point in depending on one country that too like china. it has got its own strategy and self interest in investing in pakisthan apart from economic reasons!
Clarity on political front and improved macro indicators will attract FDI. Most likely after next elections. Good times ahead.