In August, when FDI in Pakistan increased by 88%, the top foreign investors were from China and the United Arab Emirates (UAE), the two major global economies.
Power, financial enterprises, and communication ranked first among economic sectors since they drew the most investment money for their respective initiatives.
According to a report released by the State Bank of Pakistan (SBP) in the small hours of Thursday morning, FDI into Pakistan jumped 88% in August, from $59 million in July to $111 million.
Foreign direct investment (FDI) declined by 12% annually. Inflows dropped 26% year-over-year to $230 million in the first two months of the current fiscal year 2022-23.
Data from the central bank shows that FDI was $59 million in July 2022 and $230 million in August 2021.
The majority of the money that comes into Pakistan from other countries comes through FDI or foreign direct investment. Dr. Khaqan Najeeb, a former adviser to the finance ministry, said that the instrument does not add to the debt and may increase the country’s productive potential if targeted in the proper areas.
Despite his country’s efforts, he said, “unimpressive” foreign investment inflows have remained a constant source of frustration for Pakistan over the past five years.
A lot of work needs to be done to prepare assets for sale abroad, connect businesses to attract joint venture investment, and sell Pakistan as a destination beyond the power sector for investments in the agriculture and engineering sectors, he said, calling the year-on-year decline a “discomforting picture.”
In the first two months of the fiscal year 2022-23, China invested $32.7 million in Pakistan, making it the country’s largest investor by far.
However, the sum was less than the $47.1 million invested during the corresponding time in 2017.
Over the two months, multinational corporations (MNCs) in the United States invested $25.7 million, up from $10.6 million during the corresponding time last year.
During the time frame under examination, investors from Switzerland invested $23.2 million, an increase over the $22.5 million they put in during the prior year’s comparable period.
In the first two months of the current fiscal year, the electricity sector drew the biggest amount of foreign direct investment, totaling $80.4 million. More than $55 million was allocated to the industry over the corresponding period in 2016.
July and August of FY23 saw a decrease in funding for the financial sector, from $57.1 million to $50.7 million.
Investment in the communications industry was $25 million during the period, down from $54.3 million during the same time in 2016.
Foreign direct investment (FDI) in the cosmetics industry amounted to $9 million during the period under review, up from zero FDI inflows during the same time in the previous year.