KARACHI: Foreign direct investment fell sharply by 38.7 per cent during the first month of the new fiscal FY22 compared to July FY21, following the declining trend noted in the previous fiscal year.
The State Bank’s latest data issued on Tuesday showed that the country received only $90 million as FDI during July against an inflow $128.7m in the same month of the previous fiscal.
The beginning of the new fiscal did not show any improvement against the trend dominated by the previous fiscal FY21 as it fell by 29 per cent: the country received $1.847bn in last fiscal year.
The data also shows the inflow from China was drastically low compared to last year. Pakistan received $6.6m in July from China while the inflow was $44.1m in July FY21. This poor inflow is the real reason for over 38 per cent decline in July. China has been the largest investor for the last several years. In fact, no country invested like China for more than five years.
The highest inflow of $16.6m was noted from Singapore against an inflow of $3.2m in July last year. This kind of improvement was also noted in the case of Hong Kong as the inflow this year increased to $13.2m compared to $4.6m in July FY21.
The inflow from the United States in July was $14.1m compared to an outflow of $39.2m in July FY21. Inflow from the UK also improved to $8.5m compared to an outflow of $20.7m in the previous fiscal. The FDI from the UAE fell to $6.6m compared to $27.6m of July last year.
Experts believe that the foreign investment would further fall in the coming months due to instability in Afghanistan. Investors would wait till things settle down in Kabul.
It was also noted that Pakistani dollar-denominated bonds fell by 1.6 per cent in a single session on Monday as the investors fear that Pakistan may receive spillover impact due an uncertain situation in Afghanistan. Trading with Afghanistan has already come to the lowest level during recent weeks.
The exports to Afghanistan increased to $983m in FY21 against $890m in FY20. It was $1,192m in FY19 showing the decline of export to the country. The imports from Afghanistan increased to $179m compared to $121m in FY20 while it was $170m in FY19.
The total foreign private investment of the country in July FY22 increased by 60 per cent due to extremely low outflow of foreign portfolio investment. The foreign private investment rose to $88.8m compared to $55.5m in July FY21. The outflow of portfolio investment was just $1.1m in July against an outflow of $73.2m in July last year.
Published in Dawn, August 18th, 2021