FDI grows 88% to $111m in August

• Inflows decline by 12% year-on-year. 
• China, UAE turn out to be top investors in Pakistan.
• Among sectors power, financial businesses were on top.

 KARACHI: China and the United Arab Emirates (UAE), the two leading global economies, emerged as the largest foreign investors in Pakistan in August, a month that saw foreign direct investment FDI grow by 88%.

Among different sectors of the economy, power, financial businesses and communication were on top as they attracted significant investment in their projects.

The flow of FDI into Pakistan increased 88% to $111 million in August compared to $59 million in July, the State Bank of Pakistan (SBP) reported in the wee hours of Thursday.

On a year-year basis, the inflow of FDI dropped 12% on a year-on-year basis. In the first two months of the ongoing fiscal year 2022-23, inflows declined by 26% on a year-on-year basis to $230 million.

FDI stood at $59 million in July 2022 and $230 million in August 2021, according to the central bank data.

“Foreign direct investment is the best source of money flowing into Pakistan from abroad. It is a non-debt creating instrument and can add to the productive capacity of the country if geared in the right sectors,” Dr Khaqan Najeeb, a former adviser to the finance ministry, told geo.tv.

He lamented that Pakistan has been unable to attract worthwhile foreign investment and the inflows have remained “unimpressive” in the past few years.

Terming the year-on-year decline a “discomforting picture”, he said: “A lot of work has to be done to prepare assets for sale abroad, connecting business to attract joint venture investment and selling Pakistan as a destination beyond power sector for investments in agriculture and engineering sectors.”

Country-wise FDI

China remained the single largest investor in Pakistan with total investment standing at $32.7 million during the July-August period of fiscal year 2022-23.

The investment, however, was less than $47.1 million secured in the same period last year.

Multinational companies (MNCs) in the US invested $25.7 million in the two months, compared to $10.6 million in the same period last year.

Switzerland-based investors poured $23.2 million during the period under review against $22.5 million in the same period last year.

Sector-wise FDI

The power sector attracted the single largest foreign direct investment worth $80.4 million in the first two months of the ongoing fiscal year. The sector received more than $55 million in the same period last year.

Financial businesses received $50.7 million during July-August FY23 compared to $57.1 million in the corresponding period of previous year.

Communications sector attracted investment worth $25 million during the period compared to an inflow of $54.3 million in the same period last year.

The cosmetics sector received FDI worth $9 million in the period under review compared to zero inflows in the corresponding period of last year.