June 21, 2021
Foreign investment jumps by 63pc in May
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Foreign Investment Jumps By 63pc In May

The inflows of foreign direct investment (FDI) in May jumped by 63 percent to $198.3 million compared to $121.4m in the same month last year, the State Bank of Pakistan (SBP) said on Friday.

 

Given the slow growth seen in recent years, the increase of roughly $77 million in FDI might be a sign of good change.

 

According to the most recent SBP data, April this year was better than the same month in FY20. However, the month of May was even better, with inflows increasing by 25.5 percent from $158 million in April, indicating a positive trend.

 

This presents a positive image to international investors. Foreign investors are also being offered a variety of advantages by the government. Analysts say the uncertainty around the Covid-19 outbreak dominated the previous fiscal year, discouraging investors from spending. FDI inflows in 11MFY21, at $1.751 billion so far, have surpassed overall inflows of $1.362 billion in FY19.

 

China remained Pakistan’s top investor, but inflows were down from the previous year. According to SBP data, China’s FDI in 11MFY21 was $728 million, down from $843 million in 11MFY20. Hong Kong was the second largest investor at this time, with a total investment of $138 million, down from $168 million the previous year. During this time, China and Hong Kong invested a total of $864 million, accounting for over half of all inflows. Other notable FDI sources were $130.5 million from the United Kingdom, 105.7 million from the United States, and $116 million from the Netherlands.

 

A large investment of $856 million was made in the power sector during 11MFY21, followed by $227 million in the financial business sector and $206 million in the oil and gas explorations sector. During 11MFY21, total foreign private investment, including portfolio investment, dropped by 32.8 percent. Portfolio investment outflows totaled $285 million in FY20, compared to $238.5 million the previous year.

 

Despite low FDI, the country paid $10.6 billion in debt payment in the first nine months of this fiscal year, while maintaining foreign exchange reserves at a four-year high with the help of record remittance inflows and a modest recovery in the export sector.

 

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