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Foreign investment drops in April

Updated May 16, 2018

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A man cycles past the headquarters of Industrial and Commercial Bank of China (ICBC) Ltd in Beijing. The bank opened a branch in Karachi in 2011, but has recently ramped up its efforts to denominate bilateral trade and investment transactions between China and Pakistan in the yuan.
A man cycles past the headquarters of Industrial and Commercial Bank of China (ICBC) Ltd in Beijing. The bank opened a branch in Karachi in 2011, but has recently ramped up its efforts to denominate bilateral trade and investment transactions between China and Pakistan in the yuan.

KARACHI: Foreign direct investment (FDI) has grown at a slower pace during the current financial year compared to the same period last year.

FDI witnessed a drop in April and curtailed growth to just 2.4 per cent during July-April FY18.

The State Bank reported on Tuesday that the FDI during the first ten months of the current fiscal was of $2.237 billion compared to $2.184bn in the same period last year. However, Chinese investment increased by 51 per cent during this period.

The FDI noted a fall in April with $143 million inflows compared to $179m in the same month of previous fiscal year. This drop in April could be a result of increasing uncertainty on political front of the country though the economy so far reflects a better picture than the previous year.

Inflows from China showed strong growth during the 10 months as they reached $1.414bn during this period, indicating that the Chinese FDI rejected political uncertainty, or rather simply ignored it. The figure stood at $934m during the same period of last fiscal year.

Pakistan now heavily relies on China for foreign investment — accounting for 63pc of the total FDI — has further reduced inflows from other countries, particularly from Middle East and other Muslim countries except Malaysia.

The FDI from United Arab Emirates fell to just $9.3m during July-April FY18 compared to $103 m in the same period of FY17. It indicates low interest of investors in Pakistan despite the fact that UAE is the second largest trade partner of the country.

Similarly, inflows from Turkey also fell to just $22.7m from $134m in the corresponding period of 2016-17.

Only significant investment from a Muslim country was from Malaysia which rose to $123.5m during the 10 months compared to just $20.4m in the same period of FY17.

Other than China, only two countries showed significant growth investing in Pakistan. The FDI from United Kingdom increased to $244.5m versus $182m in the same period of last fiscal.

The net inflows from United States jumped to $81.6m in the first ten months against $15.6m in the corresponding period of 2016-17.

Pakistan witnessed improvement in portfolio investment as the outflow during the 10 months came down to $110.8m from $368m in the same period of 2016-17.

Published in Dawn, May 16th, 2018