Country’s FDI dips 3.1% to $542.1m, total investment surges by 137%

KARACHI: Foreign Direct Investment (FDI) dropped 3.1 per cent to $542.1 million in first quarter (July-September) of the current fiscal year 2019-20 compared to $559.4 million in the same period of last year, the State Bank of Pakistan (SBP) reported on Thursday. In September 2019 alone, the FDI increased to $385.3 million compared to $182.1 million in same period last year.

However, the total investment of the country has increased 137 per cent to $886.6 million in last three months compared to $374.1 million in the same period last year, SBP data said.

According to the analysts, national economy showing signs of recovery and stability, foreign investors are coming in the stock markets.

According to the World Bank’s report, the Asian region has continued to attract most of the FDI across the world. Pakistan luckily exists in the region but has been unable to attract its due share despite having a high potential to invite new foreign investment in different sectors of the economy.

An overvalued rupee was the major cause of concern for foreign investors in the past one to two years. However, the currency has depreciated by a massive 52 per cent since December 2017 to Rs 160.05 to the US dollar on June 30, 2019. “The rupee has remained stable since then. The central bank reported the end of uncertainty and volatility in the rupee-dollar exchange rate last month.

The analysts claimed that when Vietnam, Cambodia, Indonesia and the Philippines could attract FDI, then what was wrong with Pakistan, which had a huge potential to attract new investment. “Pakistan remains a developing economy. It still needs to launch projects in a number of sectors. For example, its railways, engineering and re-export sectors have enough potential to attract FDI,” he said.

Foreign investment in PSX

According to the latest FDI data, Foreign public investment has started returning to the Pakistan Stock Exchange (PSX) with the beginning of the new fiscal year on July 1, 2019. A massive drop in share prices may have encouraged them to invest in the stock market.

Foreign Public investment enhanced to $321.8 million in the PSX in July and Sept 2019 period compared to $0.1 million in the same period of last year. The stock market has recorded foreign portfolio inflows of $22.7 million in this quarter.

Country-wise FDI

China remained the largest investor in Pakistan. It invested $103.1 million in the three months – July-Sept 2019. However, the new investment was sharply lower than the $336.6 million it invested in the corresponding period of last year.

China has continued to invest billions of dollars in Pakistan under China-Pakistan Economic Corridor (CPEC) projects. The completion of first phase of CPEC has caused a slowdown in investment from Beijing for the time being, the analyst said.

The United Kingdom remained the second largest investor with $44.9 million compared to $75 million last year.  Malaysia, which has emerged as a new big investor in Pakistan in recent months, came at the third place with investment of $25 million compared to $7.5 million in the previous year.

Sector-wise FDI

Telecommunication  attracted the single largest FDIs of $255.1 million in last three months; July and Sept 2019 compared to negative $47.1 million in the same period of last year. Oil and Gas sector attracted $34.1 million compared to $74.1 million.

Cars manufacturers received $17.5 million in the two months compared to $19.7 million in the corresponding period last year.

 

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