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Foreign investment increased in last fiscal year

During Khan period investments rose; however, during last few months the situation is getting worse for businesses. After Airlift, another delivery service provider closed its operations across Pakistan. Unfortunately, the current economic situation is not viable for startups.

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The State Bank of Pakistan (SBP) revealed on Thursday that Pakistan attracted $1.868 billion in foreign direct investment (FDI) during the most recent fiscal year (FY22).

According to data made public by the SBP, FDI somewhat increased from July through June of the previous fiscal year by 2.6 percent.

Overall, Pakistan attracted FDI worth $1.868 billion in FY22 as opposed to $1.82 billion in FY21, a $47.3 million gain.

FDI inflows were $2.622 billion during the period under review, while outflows were $754.7 million.

Despite this, due to a slowdown in CPEC-related projects, Chinese investment in Pakistan fell by 29% in the most recent fiscal year.

Nevertheless, China continues to be the largest investor in Pakistani foreign direct investment, with $531.6, as opposed to $751.6, million in FY21.

The US came in second during the time under consideration with $249.6 million in FDI, a decrease of 47 percent from the previous fiscal year, and Switzerland came in third with $146 million FDI.

Read more: Pakistan’s IT industry makes record service exports

Due to the nation’s ongoing energy crisis, the majority of foreign investors concentrated on the power industry, bringing in $737 million in FDIC.

During the previous fiscal year, investments in the financial sector totaled $405 million, while those in the oil and gas industry totaled $195 million.

In comparison to June 2021, when FDI was $141 million, it climbed by 92 percent, or $130 million, to $271 million in June 2022.

FDI inflows were $293.4 million while outflows were $22.3 million in June 2022.

Despite a little increase, according to economists, net foreign direct investment is still substantially below the level needed to support Pakistan’s expanding economy.

Lower foreign investments during the previous fiscal year were mostly caused by political unpredictability, unsustainable domestic economic policies, and an exceptional rise in commodity prices globally, they stated.

They held the opinion that the nation would not be able to draw foreign direct investment unless structural imbalances could be corrected.

Portfolio investments experienced a decreasing tendency during the time period under examination and fell 288 percent, or $595 million.

In contrast to the $206.6 million invested in FY21, portfolio investment was negative by $388 million during the most recent fiscal year.

Additionally, compared to $2.555 billion in FY21, foreign public investment fell 88 percent to $309.5 million in FY22.

A similar reduction of 61% was seen in Pakistan’s net foreign investment, which includes foreign direct investment, portfolio investment, and foreign public investment.

Read more: Food delivery company Jovi suspends operations across Pakistan

By the end of the fiscal year FY22, Pakistan’s net foreign investment had dropped to $1.789 billion from $4.582 billion during the same period.