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

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