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KARACHI: Foreign direct investment (FDI) fell by 31 per cent during the first 10 months of the current financial year, reflecting Pakistan’s continuing struggle to attract foreign investors.
April proved particularly disappointing for the government as total FDI inflows during the month stood at just $54 million compared to $179m in the same month last year.
Interestingly, FDI from China in April was higher than the total net inflow for the month, standing at $61m. This was because several countries withdrew investments while others invested during the month.
During July-April, FDI inflows stood at $1.409 billion compared to $2.035bn in the same period of FY25, showing a decline of 31pc.
China remains top investor despite overall decline in inflows
Once again, more than half of the inflows during the 10-month period came from China, with $740m. China has been investing heavily in Pakistan for more than a decade and has become the country’s largest trading partner.
However, inflows from China were higher in the same period last year, when they stood at $1.04bn. Hong Kong also invested $281m during July-April.
Other significant inflows came from Switzerland at $170m and the United Arab Emirates at $169m.
The highest outflow was recorded from Norway, which withdrew $365m, compared with a small investment of just $5m in the same period of the previous fiscal year.
The power sector, which has faced serious criticism in Pakistan in recent years, attracted the largest investment during the first 10 months of FY26, receiving $785.6m.
The financial business sector, mostly banks, attracted the second-highest amount of FDI at $659m. Banks have been earning large profits by investing in government papers, as the country’s heavy domestic debt continues to force successive governments to borrow more.
The State Bank’s balance sheet showed heavy disinvestment from the telecommunications sector, which reached $477m during July-April compared to disinvestment of $115m in the same period last year.
Published in Dawn, May 20th, 2026
