KARACHI: Foreign direct investment (FDI) surged by over 48 per cent in the first quarter of FY25, reflecting improvement in investor confidence

However, the inflows were dominated by China as it accounted for 52pc of the total FDI the country received in the July-September quarter.

The State Bank of Pakistan’s (SBP) data issued on Monday showed the country received $771 million in FDI during July-Sept FY25 compared to $520m in the same period last year, witnessing an increase of 48.2 per cent.

The inflows from China were $404m during the quarter against $164m in the same period last fiscal year. No country is close to this volume of investment. In September, the FDI from China was $244.8m.

Saudis invest just $1.8m in July-September

Inflows from Hong Kong were $98m during the quarter compared to $67m in the same period of the last year. The UK and US inflows were $72m and 28m, respectively.

The inflows as FDI from the Arab countries remained negligible. The government has been persuading the Arab countries to invest in Pakistan. It has established a Special Investment Facilitation Council to provide maximum facilities, but significant results have yet to be achieved.

Pakistan has been facing severe political and economic uncertainties for more than two years, destroying its image abroad from an investment point of view.

The recent measures supported the economy, but political stability could not be achieved. Financial experts said if China is excluded from the list of investors, the remaining amount of FDI is negligible.

“The government has failed to attract foreign investors, including close friends like Saudi Arabia and UAE, who are not ready to risk investing in Pakistan,” said an expert on financial affairs. The FDI from Saudi Arabia was just $1.8m and $25m from the UAE.

Experts said many Pakistani companies are now based in the UAE and were investing in Pakistan as foreign investors to benefit from the facilities and get guarantees against the investment risk.

Published in Dawn, October 22th, 2024