Foreign investment down 22pc

Updated August 22, 2019


KARACHI: The total foreign investment plunged by 22 per cent in the first month of this fiscal year, reported the latest data from the State Bank of Pakistan (SBP) on Wednesday.

The total investment fell to $107.2 million during July, lower by 21.64pc over $136.8m recorded in same month of the previous year. This could possibly be a worrying sign for the government which has been met with a severe shortage of dollars since coming into power, thanks to the massive current account deficit.

This was led by net foreign direct investment (FDI) of $73.4m during the period under review, plummeting by 57.79pc, from $173.9m. On the other hand, portfolio investment was down 19.66pc to $33.9m, as against a net outflow of $42.2m in July last year.

2018-19 proved to be a dismal year for inflows as annual FDI dipped 61pc to a modest $1.251 billion, down from $3.23bn in FY18.

This massive decline paints a negative picture for investors who are cautious about their investment which has been on a downward trajectory for several years.

Perhaps the most noteworthy element of the data is the continued downward trend of Chinese investments to Pakistan, which in the wake of China-Pakistan Economic Corridor reached record highs. In July, there was a net outflow of Chinese investment at $4.5m, as compared to an inflow of $90.6m in same month last year.

Recently, Prime Minister Imran Khan iterated that all CPEC projects will be completed in time but there is a growing feeling among the business circle that China has slowed down its economic activities here.

United States was the biggest source of inbound investments during the month, registering net FDI of $16.6m in July, as against $14.4m in same period last year. Malaysia came in a close second with net inflows of $14.6m, compared to just $2.5m in same period last year.

Meanwhile, net from the United Kingdom plunged by 78.9pc to $11.1m, from $52.7m in July last year. The biggest outflow was noted from Kuwait at $16.7m, which continued July 2018 trend when the figure stood at $13.8m.

Sector-wise, oil and gas exploration recorded the highest net FDI of $13.2m in July, down from $19.6m in same month last year. This followed by textile where net investments were recorded at $10.7m and pharmaceutical and OTC products at $10.3m. On the other hand, power sector posted an outflow of $14.4m.

Published in Dawn, August 22nd, 2019