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Foreign investment plunges 41pc

Updated March 16, 2019

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Pakistan relies heavily on Chinese FDI, which constituted 44pc of the total inflows during this eight-month period. — Reuters/File
Pakistan relies heavily on Chinese FDI, which constituted 44pc of the total inflows during this eight-month period. — Reuters/File

KARACHI: The foreign direct investments (FDI) plunged by 41 per cent to $168.8 million in February, from $286.5m in same month last year, reported the State Bank of Pakistan on Friday.

The decline was less in magnitude, but still sizable, during 8MFY19 as FDI dipped 22.6pc to $1.619 billion, as against $2.012bn in corresponding period last year.

China remained the biggest investor in Pakistan as inflows from there came out at $899.6m in 8MFY19, decreasing by 32pc, from $1,321m during July-February last year. Pakistan relies heavily on Chinese FDI, which constituted 44pc of the total inflows during this eight-month period.

The United Kingdom emerged as the distant second biggest source of inflows with FDI during 8MFY19 recorded at $141.4m, down 36.3pc; from $222m. Japan came in third with inflows worth $78m, followed by South Korea $68.5m, UAE $66.3m, US $64.8m and the Netherlands $62.8m.

Foreign portfolio investment (FPI) also depicted a negative picture as the outflow stood much higher than recorded in same period last year. FPI during the July-February FY18 amounted to $408m, soaring by 243pc, from $119m in corresponding period of last fiscal year.

Highest outflow was to the US at $226.7m, followed by Luxemborg $78.3m with the two accounting for 74.75pc of the total FPI.

Overall investment, the sum of FDI and FPI, fell by 38pc cent to $1,211m during the eight-month period, as against $1,973m in corresponding duration last year.

These figures might be uncomforting for the government as it struggles to arrange dollars through deposits and loans from friendly countries. So far, it has received $3bn from Saudi Arabia and $2bn from the UAE, with another $1bn scheduled soon. This is to aid Pakistan’s foreign exchange reserves which stood at $14.965bn as of March 8.

Published in Dawn, March 16th, 2019