Economists said the ongoing political uncertainty has largely contributed to the recent decline in foreign investment. As the general elections are due in the middle of this year, foreign investors have adopted a wait and see policy and closely monitoring Pakistan's economy. They said that most of investment has been made by China under the CPEC and this trend is likely to continue in coming months.
The State Bank of Pakistan Thursday revealed that FDI continues to present a dismal performance falling by 2.9 percent or $44.3 million during this fiscal year. FDI stood at $1.488 billion during first seven months of FY18 compared to $1.532 billion in the corresponding period of FY17. During the period under review, the country received FDI inflows amounting to $1.889 billion against the outflows of $401 million.
The country-wise analysis showed that China is leading with $1.003 billion foreign direct investment in Pakistan in July-January of this fiscal year against $474 million in the same period of last fiscal year, showing an increase of 111 percent or $529 million. Most of investment was arrived in power and construction under the ongoing CPEC projects.
During the period under review, the vibrancy of Pakistan's telecom sector attracted an investment of over $ 118 million from Malaysia. The UK is on third place with $94 million FDI in Pakistan.
The second component of foreign investment, ie, portfolio investment also posted a decline of 90.4 percent because of dull performance of the country's equity market. Portfolio investment stood negative at $34 million in July-January of this fiscal year.
However, during the period under review, foreign public investment in the country increased by 139 percent. Foreign public investment surged to $2.451 billion in the first seven months of this fiscal yearn against $1.024 billion in the corresponding period of last fiscal year, showing an increase of $1.427 billion.
During the period under review, with a massive increase in foreign public investment, net inflows of foreign investment in Pakistan mounted by 77.3 percent. With current surge, net inflows of foreign investment reached $3.905 billion in July-January of FY18 compared to $2.203 billion in July-January of FY17, depicting an increase of $1.702 million.