Pakistan has continued to attract Chinese investment related to the Belt and Road Initiative, with Foreign Direct Investment (FDI) inflows rising from $2.5 billion in 2016 to $2.8 billion in 2017, says World Investment Report (WIR) 2018.
The United Nations Conference on Trade and Development (UNCTAD) WIR 2018 “investment and new industrial policies” states that FDI to Pakistan increased from $2.479 billion in 2016 to $2.806 billion in 2017.
FDI inflows to South Asia contracted by 4 per cent to $52 billion, owing to a drop in inflows to India. FDI to India decreased from $44 billion in 2016 to $40 billion in 2017 i.e. by over 10 percent. FDI to Bangladesh also decreased by around 7 percent from $2.333 billion in 2016 to $2.152 billion in 2017. FDI inflow to Sri Lanka increased from $897 million in 2016 to $1.375 billion in 2017, and for Nepal FDI increased from $106 million in 2016 to $198 million in 2017.
Outflows FDI from Pakistan jumped from $52 million in 2016 to $67 million in 2017. Outflows from India, the main source of FDI in South Asia, more than doubled to $11 billion in 2017 against $5.07 billion, while outflows from Bangladesh remained $170 million in 2017 compared to $41 million in 2016.
Inflows to the Islamic Republic of Iran increased by nearly 50 per cent to $5 billion. Following the lifting of sanctions in 2015, the country’s rich reserves started to attract significant foreign participation in the exploration and production of oil and gas.
The United States remained the largest recipient of FDI, attracting $275 billion in inflows, followed by China, with record inflows of $136 billion while India is at 10th position with $40 billion inflows.
Global FDI flows fell by 23 per cent to $1.43 trillion. This is in stark contrast to the accelerated growth in GDP and trade. The fall was caused in part by a 22 per cent decrease in the value of cross-border mergers and acquisitions (M&As). But even discounting the large one-off deals and corporate restructurings that inflated FDI numbers in 2016, the 2017 decline remained significant. The value of announced greenfield investment – an indicator of future trends – also decreased by 14 per cent, maintained in the report.