FDI Inflow From China Reaches Record High in FY17

The net Foreign Direct Investment (FDI) from China has surged to $1.234 billion, which is more than half of the overall FDI in the financial year 2016-17, thanks to China Pakistan Economic Corridor (CPEC) project.

According to the State Bank of Pakistan (SBP), the net FDI from China stands at 57 percent of the total net FDI and amounts to $2.157 billion in financial year 2016-17, an increase of 9 percent or $180 million from the previous financial year.

The inflows from China were recorded at $1.185 billion in real sector and $48.4 million in equity and debt securities under Foreign Portfolio Investment (FPI).

The inflow of investment from China, in the backdrop of ongoing mega projects under CPEC, is increasing each month but experts believe that going forward other countries will also contribute to reap the financial benefits of the mega projects.

FDI From Top Countries

The USA is the second big investor of Pakistan in the current financial year with $707 million net FDI. Its FDI inflows stand at $71 million in real sector and FPI stand at $636 million—a reverse trend compared to China.

It is pertinent to mention here that FDI is considered as more sustainable and productive over FPI.

According to State Bank of Pakistan (SBP), Netherlands, France and Turkey were among leading investors with inflows standing at $465 million, $235.9 million and $135.5 million.

Countries which recorded outflows during financial year of 2016-17 included Luxembourg with $531 million, UK with $288 million and Norway with $17 million.

The net FDI includes foreign private investment of $2.40 billion and foreign public investment of $277 million. It also includes outflow of $530.9 million of foreign portfolio investment mainly from stock exchange, which makes the overall FDI $2.157 billion.

A recent Overseas Investors Chamber of Commerce and Industry (OICC) security survey shows that the foreign investors are now satisfied with the improved law and order situation of Pakistan and they now visit Pakistan without any fear of holding business meetings.

“This is a strong indicator that Pakistan as a destination has improved on the security concerns map and that such foreign businessmen are being granted travel permissions for their visit to Pakistan from their respective embassies and travel security agencies”, the survey report said.

The major chunk of foreign investment is going into energy sector which will eventually increase electricity production to benefit people and productivity of the country’s major economic sectors.

FDI in Top Sectors

Power Sector is the leader with net inflows of $795 million during the 12 months of financial year 2016-17. It is followed by Food Sector with $493 million, Construction with $467 million, Electronics with $143 million and Oil and Gas Exploration Sector with $157 million.