Private Foreign Direct Investment (FDI) increased from 499.1 million dollars in July-October 2017 to 886.4 million dollars in the comparable period of 2018 according to the State Bank of Pakistan (SBP) website - a rise of 77.6 percent - though the data for last year was revised reflecting an accurate picture while the data for the current year is cited as provisional. In October 2016, net FDI (inflows not adjusted for outflows) registered 115.3 million dollars while the comparable figure for last month was 277.7 million dollars. The major contributor to the rise in FDI was China registering a 225 percent increase from the comparable period of the year before - 631.7 million dollars during July-October 2017-18 in comparison to 194.7 million dollars in the comparable period of 2016-17. This increase was no doubt under the umbrella of the China Pakistan Economic Corridor (CPEC) projects.

China has to-date signed a total of over 60 billion dollars worth of projects - with around 42 billion dollars projects signed in April 2015 when President Xi Jinping visited Pakistan. Each project requires time-consuming paperwork which is now at an advanced stage with respect to several projects and is the reason behind increased FDI inflows from China though not on the scale one would have expected. These projects as per the CPEC official site are as follows: (i) 2×660MW Coal-fired Power Plants at Port Qasim Karachi; (ii) Suki Kinari Hydropower Station, Naran, Khyber Pakhtunkhwa; (iii) Sahiwal 2x660MW coal-fired power plant, Punjab; (iv) Engro Thar Block II 2×330MW coal-fired power plant TEL 1×330MW Mine Mouth Lignite-Fired Power Project at Thar Block-II, Sindh; Thal Nova 1×330MW Mine Mouth Lignite-Fired Power Project at Thar Block-II, Sindh; (v) Surface mine in block II of Thar coal field, 3.8 million tons/year; (vi) UEP 100MW Wind Farm (Jhimpir, Thatta); (vii) Sachal 50MW Wind Farm (Jhimpir, Thatta); (viii) SSRL Thar Coal Block-I 6.8 mtpa & SEC Mine Mouth Power Plant (2×660MW); (ix) Karot Hydropower Station; (x) Three Gorges Second Wind Power Project; (xi) CPHGC 1,320MW coal-fired power plant, Hub, Balochistan; (xii) Matiari to Lahore ±660kV HVDC Transmission Line Project; (xiii) Matiari (Port Qasim) - Faisalabad Transmission Line Project; and (xiv) Thar Mine Mouth Oracle Power Plant (1320MW) and surface mine. Given the range of the power projects, it is little wonder that net FDI for the power sector rose from 187.4 million dollars in July-October 2016-17 to 422.4 million dollars in July-October 2017-18. However, while the CPEC is indeed regarded as a game changer yet given the lack of transparency of many of the projects under the CPEC it is unclear whether these projects better reflect net FDI inflows or a loan.

FDI increased in communications - from (negative) 32.8 million dollars in July-October 2016-17 to 69.4 million dollars in 2017-18 though it declined in information technology - from 5.3 to 4.5 million dollars in the two periods under consideration, and financial business FDI inflows declined from 80.9 million dollars to 76.3 million dollars.

However, the largest raise in FDI was from Malaysia - from net inflows of 9.4 million dollars in July-October 2017 to 107.6 million dollars in the comparable period of 2017-18 with 92 million dollars FDI in July 2017-18 alone. The direction of this FDI was in electronic firms and it is uncertain whether any more may be forthcoming anytime soon.

Disturbingly, net FDI not only declined from most other countries but also in other sectors including in food, (from 33 million dollars in the first four months of 2016 to 7.9 million dollars in the comparable period of 2017), and transport equipment. In other words, there is no need for complacency and much work needs to be done to make Pakistan an attractive destination for FDI.

Copyright Business Recorder, 2017