KARACHI: Foreign direct investment (FDI) increased by over 11 per cent during the first seven months of the current fiscal year (7MFY22), data shared by the State Bank of Pakistan showed on Thursday.

However, the foreign investment declined by 35pc year-on-year in January. While it plunged by 50pc month-on-month reflecting a poor investment environment in the country.

The country attracted $1.166 billion during July-Jan FY22 which was 11.3pc higher when compared with inflows of $1.084bn in 7MFY21.

In January, the FDI inflows plunged to $110m from $218.7m in December 2021. The country attracted $168.3m in January 2021.

Month-on-month inflows plunge 50pc in January

The first half of FY22 witnessed a growth of 20pc in foreign investments. The FDI inflows in December 2021 were much higher at $218.7m when compared with $169.4m in December 2020.

The highest inflow of $306.4m was received from China in 7MFY22. During the same period in FY21, the FDI inflow was $432.6m. China has been the biggest investor for the last many years.

Pakistan received $123.6m from Hong Kong compared to $103.8m a year ago. However, the biggest improvement was noted in the inflows from the United States which rose to $168.9m against $77.9m in the same period of last year.

Investments from Malaysia and Singapore also improved to $60.9m and $70.6m compared to last year’s $18m and $10m, respectively.

Significant inflows were also noted from The Netherlands ($82.3m) and Switzerland ($68m). The inflows from the UK fell to $40m from $83m in the same period of last year.

For over 10 years, the FDI did not show significant improvement and the government had to rely on remittances and export proceeds.

Exports increased during 7MFY22 but the imports grew more sharply creating an unbridgeable gap for the government.

The country has been receiving record remittances for the last few years. It expects to receive over $30bn in FY22. Despite the improvement in FDI, export proceeds and remittances, the country’s current account deficit swelled to $9bn in the first half of FY22.

Published in Dawn, February 18th, 2022

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