The State Bank of Pakistan (SBP) data showed on Tuesday that the foreign direct investment (FDI) inflows from China amounted to $218 million in the corresponding months of 2014/15.
The overall FDI posted a growth of 5.4 percent to $1,016 million in July-April 2015/16 over the same period a year earlier.
Analysts attributed the significant increase to major activities under the China-Pakistan Economic Corridor (CPEC) projects. China has launched $46 billion CPEC projects, comprising infrastructure buildup in the country.
Sector-wise analysis revealed that power sector was the major recipient of FDI during the period under review. The inflows of FDI towards the sector posted a sharp growth of 208 percent to $518 million.
Pakistan is attracting foreign companies in various sectors. It attracted substantial amount of foreign investment in mid 2000s in banking and telecommunication sectors.
“However, due to deteriorating security situation after 2007 coupled with global financial crisis of 2008-09, foreign investors avoided Pakistan as an investment destination,” the SBP said in its recent quarterly review of the country’s economy.
The SBP, however, is optimistic about rise in FDI in coming months as more FDI is expected from China under the CPEC. The central bank said the government estimated disbursements of Rs207 billion (around $2.1 billion) from China in 2015-16 budget. Power and construction sectors are the prime recipients of investment.
The central bank said no major activity is in pipeline other than CPEC. It added that uncertainty in the international oil market and the squeeze in institutional liquidity stalled growth in global FDI.
The inflow of FDI was deteriorated in the last fiscal year to $923 million from $1.7 billion in the preceding fiscal year.
The overall foreign private investment in the country fell 64.7 percent to $635 million in July-April. It was $1.8 billion in the corresponding period of the last fiscal year. FDI and portfolio investments are major components of the total foreign investment.
In July-April 2015/16, the portfolio investment outflows amounted to $381.2 million as compared to inflows of $836.8 million in the same period a year ago.
The capital market experts attributed the decline to global recessions and uncertainty in international oil prices.
The foreign public investment outflow stood at $19.6 million in the months under review as compared to inflows of $937 million a year earlier.
The News International
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