50
KARACHI: Foreign direct investment (FDI) fell by 35 per cent in the first five months of the current fiscal year, mainly due to a sharp drop in Chinese investments.
The State Bank reported on Monday that the FDI during July-November FY19 clocked in at $880.7 million against $1359m in the same period of last fiscal year; a decline of $478m or 35pc.
FDI from China decreased to $554m during the period under review compared to $912m last year. Pakistan has been largely dependent on China for its FDI since total investments from the country during the last fiscal year stood at $2.85bn. The inflow from China constituted 66pc of the total FDI in FY19.
“Investors are moving ahead, but cautiously and with a wait-and-see attitude” said Abdul Aleem, Secretary General of the Overseas Investors Chamber of Commerce and Industry. He was upbeat about more foreign investment in the future, pointing to the acquisition of 29pc shares of Elengy Terminal Pakistan Ltd (ETPL) by Dutch giant Vopak announced late last week.
FDI had been on a declining trend in the country till FY2012, when it hit a trough of $820m but began rising from FY2013, led mainly by Chinese investments under China-Pakistan Economic Corridor. But those have begun to taper off now as the early harvest projects draw to a close.
The government officials are preparing to leave Beijing for the 8th Joint Cooperating Committee talks to develop a framework to guide the second generation of Chinese investment flows into the country, primarily through the construction of the Special Economic Zones and the agriculture sector.
The central bank report shows the outflow of portfolio investment rose to $330m in the five months compared to an outflow of $100m during same period of last fiscal year.
Furthermore, the overall foreign private investment fell by 56pc to $550m in the five months. Pakistan’s economic hardships have grown in the last year as the authorities failed to curtail the rising current account deficit amid declining reserves.
The government after assuming power in August sought help from Saudi Arabia and was successful in securing a $3bn bailout, of which it has already received $2bn, with the last payment due in January next year.
However, the government will not be able to use these funds to pay off its foreign liabilities.
Published in Dawn, December 18th, 2018
Read more
On DawnNews
Comments (50) Closed
Dec 18, 2018 09:57am
When the inflow is less and outflow is higher, such as debt, loans, to payoff, everything will shrink.
Recommend
0
Dec 18, 2018 10:01am
Pakistan is lucky to have Imran Khan as PM. Pakistan Zindabad.
Recommend
0
Dec 18, 2018 10:11am
Well done PM IK
Recommend
0
Dec 18, 2018 10:24am
China is interested in providing loans and not investments.
Recommend
0
Dec 18, 2018 10:34am
China will only make Pakistan keep dreaming about big investments. Their purpose is solved with availability of port, road, railway and trade facilities for themselves. Pakistan can stay in the dream.
Recommend
0
Dec 18, 2018 10:35am
Soon Pakistan will be no 1 for investment country. As Gov is doing good job for attracting foreign investment
Recommend
0
Dec 18, 2018 10:48am
This is going to get worse as the Chinese economy slows down owing to its own financial problems and along with the US China trade war.
Recommend
0
Dec 18, 2018 11:06am
Brace for impact!
Recommend
0
Dec 18, 2018 11:15am
@Prateik, please don’t mix government loan and business investments. What PK got from China is loan and hope and opportunity in future. What PK got from other countries is just respect and free and just let PK live on it’s own
Recommend
0
Dec 18, 2018 11:17am
Whosoever investing would have to consider a huge risk of further currency devaluation.
Recommend
0
Dec 18, 2018 11:17am
What PTI government is doing is only press conference
Recommend
0
Dec 18, 2018 11:18am
IT seems PML N was better than PTI for economic progress in country.
Recommend
0
Dec 18, 2018 11:22am
66% of over all FDI from China alone??!!
Recommend
0
Dec 18, 2018 11:37am
The present PTI Government needs to bring about a drastic change in its policies in ensuring a congenial, investment-friendly climate. By turning the whole country into some sort of an investigation agency will only scare away the potential investors.
Recommend
0
Dec 18, 2018 12:32pm
Now we realize that PMLn was making far better policies economically thereby managing inflation, dollar fluctutation that also attracted investments loke Wolks wagon, Suzuki, exxon during last years of pmln. Noy only this but to see heavy infrastructures being developed it provided opportunities for both pakistanis and investors as well.
Recommend
0
Dec 18, 2018 12:37pm
Its incompetence of PTI government
Recommend
0
Dec 18, 2018 12:42pm
"FDI plunges as inflows from China shrink"
Trump strategy is working.
Recommend
0
Dec 18, 2018 12:45pm
I am so curious to know that how much FDI does ever came from India?
Definitely this is the question which every Pakistani should ask!
Being a neighbors and having animosity doesn't stop China FDI in Japan and Japanese FDI in China.
They might go for wars but Indian FDI in China and Chinese FDI in India is growing fast. So why Pakistan never allowed the Indian investors to invest in Pakistan?
And we must understand that even if India doesn't allows Pakistani's investors but barring Indian investors like Tata,Birla,Ambani etc in our 70 years of existence is a grave mistake on our part.
Let us allow Indian investors and then see how our forex reserves climp to new highs day after days.
Recommend
0
Dec 18, 2018 12:49pm
Whereas India clocked $60 Billion last year
Recommend
0
Dec 18, 2018 12:52pm
Good intentions are not enough to run a country. Good policies are also necessary.
Recommend
0
Dec 18, 2018 12:56pm
China objective of acquiring Gwadar strategic Port, by indulging Pakistan into greater Debt Trap for building Orange Trains, Roads have considerably met.
Chinese Debt trap plan is revealed which is why Chinese official’s mismanagement with Pakistan delegations have been witnessed at several occasion. If CPEC was so much in favor of Pakistan, Pakistan must have public the documents , so all rating agencies increase Pakistan Stability ratings .
Pakistan need to play smartly. There is no such thing as free money.
Recommend
0
Dec 18, 2018 01:01pm
Future is bad for Pakistan
Recommend
0
Dec 18, 2018 01:06pm
FDI from China..is it a loan or investment in our republic ?
Recommend
0
Dec 18, 2018 01:10pm
@ranga, These are those investment in Port area from where China will be benefited to export their product to Middle East countries and ruin local industry with the trade surplus.
Recommend
0
Dec 18, 2018 01:16pm
As a investment banker,these are my suggestions.
1.Unsafe environment: recent road blockage by radical forces gives bad reputation for the nation and also this leads to confusion whether returns are possible/outputs delivered on time.
2.Shortage of Skilled Labour. Poor literacy rate(decreasing). Returns on this are not immediate (20yrs+ for educating tax paying individual).
3.Tax Incentives to Startups,techies and investors.
4.Encourage Businessman i.e., Job creators
5.Special economic zone: availability of land,labour and taxes incentives for certain period.
6.Stable economy and ratings: Huge loans,debts addressed and improve current rating (BB- to BB+)
7.English speaking population: Phillipines attracted call centres jobs as they speak fluent English with American accent.
8.Micro and Macro indicators: Encourage cottage industries.Not everyone can move to cities looking for job.
9.Agriculture: Dams & reservoirs for water conversation.Good yield contributes to 30% increase in GDP.
Recommend
0
Dec 18, 2018 01:31pm
Leave alone IK.. any other leader cant do much .
Recommend
0
Dec 18, 2018 01:59pm
Those incoming flows need to be wired back with interest - double digit.
Recommend
0
Dec 18, 2018 02:12pm
Kenya received more than FDI this year, Hollow Talk yield no results
Recommend
0
Dec 18, 2018 02:17pm
Due to US tariffs, China herself is staring at an economic slowdown.
Recommend
0
Dec 18, 2018 02:23pm
1B was received from S.A. now time to beg from others
Recommend
0
Dec 18, 2018 02:29pm
Game is definitely changing.
Recommend
0
Dec 18, 2018 02:30pm
The iron brother is not giving any more money! Is the honey moon over? And of course Pakistan does not get nor expects money from anywhere else.
Recommend
0
Dec 18, 2018 02:53pm
@Danish, Invest in what, industries, factories, and who is going to buy them.
Recommend
0
Dec 18, 2018 02:57pm
Why the picture of US dollars? Why not show Pakistani currency?
Recommend
0
Dec 18, 2018 02:57pm
South Korea was bankrupt in their journey towards becoming an Asian Tiger never doubt Pakistani peoples will an desire.
Pakistan Zindabad!
Recommend
0
Dec 18, 2018 02:59pm
Unfortunately, the current business environment are neither conducive nor friendly to Foreign Direct Investment or FDI as commonly known, into the land and soil of the Islamic Republic of Pakistan.
Recommend
0
Dec 18, 2018 03:00pm
Pakistanis do have funds. They don't trust their government and instead invest their.money abroad. One should not blame them as any body wants that it's investment should be protected and prosperous.when someone invest in Pakistan all the government institutions whole heartedly encircle him and make sure that he leave the country and abundant it's investment. Out laws also play their part and try to snatch his property or whatever assets investor has. In these circumstances who will like to invest in Pakistan except front men of political parties.
Recommend
0
Dec 18, 2018 04:28pm
Don't have to look far why this is happening, it is the same thing as before: political instability.
Recommend
0
Dec 18, 2018 04:41pm
An easy alternate to FDI is to encourage overseas Pakistani's to send dollars. But government need to remove restrictions so that overseas Pakistani's can take their dollars out of Pakistan too when they wish. No one wants their hard earned life saving stuck in Rupees which is always on the declining trend.
Also, government should offer an exchange rate that is better than open market. This will be less expensive that getting foreign loans.
Government should offer incentives to those who send money. I have several Pakistani origin friends working overseas just like me who would love to either build a house or invest hundred of thousand dollars in real estate. But the fear of not being able to get the dollars out of Pakistan in times of their need is preventing them.
Banks should make it easy to send money from US and Canada and to open dollar accounts in Pakistan instead of asking unnecessary information, such as tax filing status, their foreign employer, salary, etc.
Recommend
0
Dec 18, 2018 08:34pm
China who has achieved all its objectives shall further reduce its investment in Pakistan in future. Pakistan needs to drastically change its foreign policy soon to make the country conducive for foreign investment by other countries.
Recommend
0
Dec 18, 2018 09:09pm
@Imtiaz Ali Khan, Since formation South Korea received only 15 billion USD assistance from US and built a world class infrastructure and now it is one of the leading countries. But Pakistan received 33 billion USD since 2001, none of it went to development. Not to mention the huge amount it received during Afghan war and before. Every three or four years, it declares bankruptcy and run to IMF for rescue. It's time to put house in order.
Recommend
0
Dec 18, 2018 09:54pm
China may not be able to invest much in Pakistan as it is in serious financial crisis at home. Due to huge investments in One belt road projects in various countries including Pakistan and increase in tariff by US, China's foreign debt has increased from $14.5 trillions in 2016 to whooping $28 trillions in Sep 2018. China's debt to GDP ratio which was steady 61 percent in 2016 has alarmingly increased to 250 percent. This should cause some worry to Pakistan as China may not invest generously in Pakistan or give any concessions in loan repayments.
Recommend
0
Dec 18, 2018 10:05pm
Wait this only the what you called early harvest of cpec
Recommend
0
Dec 18, 2018 11:02pm
PM trip a waste of poor man pocket...
Recommend
0
Dec 18, 2018 11:03pm
@desi dimag,
Only PM with headlines....
Recommend
0
Dec 18, 2018 11:03pm
@Danish,
Stock market says it all!!!!!
Recommend
0
Dec 18, 2018 11:25pm
@Masterstroke, A good way to look at Indian FDI is to look at Bangladesh and you will know the real truth about Indian intentions. Chinese FDI into Japan or vice versa and Chinese FDI into India are based on sound business and economic policies of these countries. And China/India quarrel is just an old border dispute /claim by India which India has already handed them on the silver platter. India occasionally makes noise to appease Indian public and knows well the perils in taking the dispute to the next level.
But in Pakistan's case Chinese very intimately know how our previous government worked as they were busy in money laundering, filling their own coffers, so who would invest in such a high-risk unstable and unpredictable environment? It is not rocket science just plain and simple business sense. If PTI brings stability and makes sound economic policies, FDI would eventually come !!
Recommend
0
Dec 19, 2018 01:02am
@Masterstroke, Simple. We are terrified of allowing our Arch Enemy, Existential Threat to invest in our country lest they should destroy our economy. Same reasoning prevents us from granting India Most Favored Nation (which designation is a misnomer as all it means is being treated as equal to all other countries for doing business) while India grated us that status decades ago. We are OK with China destroying our local industry by dumping its cheap products.
Recommend
0
Dec 19, 2018 02:34am
FDI means "Foreign Deficit Indicator" in case of Pakistan. It has been going down and will only accelerate once the hoopla of the PTI Government settles and the reality sets in. No concrete steps are taken or even suggested by the current PTI Government that would induce Foreign entities to invest in the unruly, unpredictable Pakistan market.
Recommend
0
Dec 19, 2018 09:26am
The fact is that forget FDI. Even local investment is not growing. Unless local investment is encouraged by good policies do not expect FDI to flow in. So the first step is to correct policies and encourage local investment.
Recommend
0
