Economists are optimistic that with improved energy situation and law and order situation, the country is likely to attract more foreign investment in coming months. Massive inflows under the CEPC are also likely to mature during this fiscal year. According to State Bank of Pakistan (SBP), FDI registered an increase of 155 percent during July-August of FY18. FDI amounting to $ 457.2 million arrived in Pakistan during first two months of this fiscal year compared to $ 179.4 million in the same period of last fiscal year (FY17), depicting an increase of $ 278 million.
The rising inflows and lower outflows mainly contributed to higher FDI. During the period under review, FDI inflows stood at $ 506 million against the outflow of $ 49 million. The detailed analysis revealed that investors from China and Malaysia largely invested their capitals in Pakistan. These two countries have a share of over 80 percent in the total FDI arrived in Pakistan during July-August of FY18.
China''s FDI surged to $ 259 million in first two months of this fiscal year compared to $ 48.4 million in the corresponding period of last fiscal year. Similarly, Malaysia''s direct investment in Pakistan stood at $ 110.8 million in July-August of FY18 up from $ 3.1 million. Sector-wise analysis revealed that most of the foreign investment has been made in power and communication sector. The SBP reported that foreign investors invested $ 211 million in power sector and $ 94 million in communication sector during the first two month of current fiscal year.
According to SBP, during the period under review, portfolio investment witnessed a downward trend falling by 358 percent. Portfolio investment stood negative at $ 105.7 million in July-August of FY18 compared to an investment of $ 40.9 million in the corresponding period of last fiscal year. Similarly, foreign public investment also declined by $ 49.5 million.
Total foreign investment in Pakistan, comprising FDI, portfolio investment and foreign public investment, surged by 37.1 percent to reach $ 301.8 million during July-August of this fiscal year up from $ 220.2 million in the same period of last fiscal year. Month-on-month basis, FDI registered an increase of 148 percent or $ 140 million to $ 234.5 million in August 2017 compared to $ 94.6 million in August 2016. During August 2017, FDI inflows stood at $ 258.2 million against the outflow of $ 23.7 million.
Copyright Business Recorder, 2017