Foreign direct investment, a big indicator of growth for any country has not been so great for Pakistan over the last couple of months. The State Bank of Pakistan released FDI data on Friday that showed that investment into sectors of the Pakistani economy like power, telecommunication, and oil and gas exploration remained at a miserly $1.55 billion in the first 10MFY21.
This is a big question for the current regime, as the country has been struggling to attract any investment from foreign investors into the country, but the incumbent government had set it among its goals to increase the FDI into Pakistan.
However, it is worth mentioning that the Year-on-Year investment in the country has increased in April 2021 compared to April 2020, an increase of $7 million, up from $151 million to $158 million. This is an increase of 4.6 percent, which may be attributed to the reopening of the global markets as the mass population in the first world is going on successfully.
According to the data, the ten-month fiscal year 2021 (10MFY21) Foreign Direct Investment (FDI) came down to $1.55 billion down from $2.3 billion in 10MFY20. This decrease in FDI over July-Apr FY 2020 equals $747.9 million or 32.5 percent.
It is worth mentioning that Foreign Private Investment has two sub-categories, the Foreign Direct Investment and The Foreign Portfolio Investment. Now that we have discussed a decrease in foreign direct investment, let’s discuss foreign portfolio investment.
The foreign portfolio investment, which refers to the purchase of securities and other financial assets by investors from another country, remained negative, meaning people took money out of Pakistan.
For the July-April 2021 10MFY21, the portfolio investment showed a deficit (meaning outflow of money from Pakistan compared to inflow) of $280 million compared to a $182.7 million deficit in 10MFY20, showing a decrease in portfolio investment of $97.5 million or 53.3 percent.
Inflows from China Increased
According to the country-wise data, the inflows from China increased during the 10MFY21 to $1.02 billion compared to $952.9 million in 10MFY20, showing an increase of 7.38 percent Year-on-Year.
Another good news is that during the current fiscal year Jul-Apr 2021, the outflows of FDI by Pakistanis into the Chinese economy have increased to $315 million compared to $87.5 million in the same period of last fiscal year.
This increase of 260 percent in Pakistani outflows shows that Pakistani businessmen and investor’s reach in the Chinese economy has increased.
Similarly, inflows from UAE increased from $120.4 billion in 10MFY20 to $132.8 billion during the current fiscal year.
Discussing the EU countries, net FDIs from the Netherlands and Switzerland were $62.7m and $73.9m, respectively. The net inflow from the Netherlands during the same period last fiscal year was $108.5m.