KARACHI: Foreign direct investment (FDI) fell by over 32 per cent during the 10 months of the current fiscal year compared to the same period in the previous financial year.
However, data released by the State Bank of Pakistan on Friday showed that the inflow during April 2021 increased compared to the same month of last fiscal year.
The country has been struggling for the last several years to attract foreign investment but the latest figures suggested that the efforts by relevant quarters could not bring about positive results.
The country received $1.553 billion FDI during July-April FY21 against the inflows of $2.301bn in the same period last financial year — a decline of $748 million, or 32.5pc.
The inflow in April this year stands at $158m compared to $151m in same month last year
Foreign private investment, which includes portfolio investment, stood at $1.273bn, showing a decline of 40pc compared to last year.
The outflow of portfolio investment during the 10 months of the current fiscal year was $280m compared to an outflow of $182m during the same period last year.
The outflow from the equity market was higher due to the effect of the coronavirus pandemic as investors lost confidence over the performance of companies operating in the country.
Drop in Chinese investment
However, inflows from a few countries were significant during the current fiscal year while investment of China was the highest among all.
The inflows from China during the 10-month period also fell to $708m compared to $865.3m FDI from Beijing during the same period last year.
However, the inflow from China is almost 46pc of the total FDI the country received during the July-April period.
The second biggest inflow of $127.6m the country received was from Hong Kong. However, the FDI from the same country in the same period last financial year was $163.5m.
China has become the biggest trade partner of Pakistan while exports from the country have also been increasing for the last few years.
The inflow from the United Kingdom increased during the current fiscal year as it reached at $118.7m compared to $102.7m in the same period last fiscal year.
The UK is the largest investor in the long-term domestic bonds called Pakistan Investment Bonds.
The FDI from the United States also increased slightly.
During the 10-month period, inflows were $96m compared to $89.4m last year.
The UK and US remained important for Pakistan due to increasing remittances. Remittances have been increased from the UK and US by 68pc and 58pc, respectively, during the last 10 months of FY21.
FDI from UAE increased
The FDI from the UAE, which is the second largest trade partner of Pakistan, sharply increased this year to $86.6m. During the same period last year, there was a net outflow of $31m from Pakistan.
The FDI from the Netherlands and Switzerland was $62.7m and $73.9m, respectively. The inflow from the Netherlands during the same period last fiscal year was $108.5m.
The FDI witnessed slight improvement in April as it was higher than the same month of the last fiscal year. The inflow in April 2021 was $158m compared to $151m in the same month last year.
The country’s external account is in a much better shape compared to the previous two years and this could boost the confidence of the foreign investors.
Published in Dawn, May 22nd, 2021