KARACHI: Foreign direct investment (FDI) increased 57.2 per
cent year-on-year to $1.14 billion in the first five months of 2017-18.
FDI
was dominated by China as its share was 73pc in total inflows,
according to data released by the State Bank of Pakistan (SBP) on
Friday.
It was $729 million in the comparable five-month period of 2016-17.
Rising
FDI is a good sign amidst dwindling foreign exchange reserves. The
government recently raised $2.5 billion by auctioning bonds in the
international market to improve its reserves.
SBP data
showed the power sector received $539m, highest among all sectors,
during the five months against an inflow of $214m a year ago.
The construction sector received an inflow of $271m compared to just $39m in the same period of the preceding fiscal year.
The
oil and gas exploration sector attracted $74m against $57m a year ago.
Inflows to the financial businesses witnessed a decline as foreign
investment amounted to $75m against $91m last year.
It is
a good sign that China has been increasing its investment in Pakistan.
But at the same time, it also indicates that inflows from countries
other than China have decreased. This means Pakistan’s reliance on China
for investment has been growing.
FDI from the largest
Asian economy rose to $840m from $224m a year ago. Most of Chinese
investments are under the China-Pakistan Economic Corridor.
More
surprisingly, inflows from the United States jumped to $471m during the
five months in contrast to an outflow of $5m a year ago. The change is
surprising in the wake of deteriorating relations with the United States
in recent months.
Malaysia was the third biggest foreign investor. Its FDI was $112m compared to $4m in the same period of the last fiscal year.
The
SBP reported that the overall foreign private investment, including
portfolio investment, increased 66pc to over a billion dollars during
the period under review. Portfolio investment noted an outflow $96m,
registering little change from a year ago.
Pakistan has
been struggling to attract foreign investment, particularly from Arab
counties, but its attempts have largely been futile. This is despite the
fact that bilateral trade with Gulf countries has been growing and is
mostly in their favour.
