Chinese Investment Doubles Foreign Direct Investment in Pakistan

Foreign investment in the country showed a staggering growth of 126% during the first ten months of the current financial year 2019-20 due to handsome inflows from China for various development projects under China Pakistan Economic Corridor (CPEC).

According to the data released by State Bank of Pakistan (SBP), FDI in real sectors has surged to $2.28 billion during the period of July to April of FY20 as compared to $1.006 billion in the same period of last financial year, showing an increase of $1.275 billion.

Out of $2.2 billion inflows of FDI, China has been the leading contributor with an investment of $877 million and a share of 38% during the said period. The consistent inflows of investment are attributed to the infrastructure development projects under CPEC which include sectors like power, oil and gas exploration, and development and construction.

Other countries are Norway with FDI of $288 million, Hong Kong with $188 million, Malta with $185 million, and the Netherlands with $111 million. Sectors that attracted FDI in industries are power with FDI of $775 million, telecom sector with $477 million, oil and gas with $257 million, and financial business with $241 million.

Net Investments Are Shrinking in Reality

The FDI showed a growth of 126 percent in the ten months however the growth stood at 137 percent a month ago.

Despite the FDI of $2.28 billion from April to July, the staggering outflows from Foreign Portfolio Investment (FPI) decreased its overall worth in the external account.

During the period, the FPI showed an outflow of $234.5 million which lowered the net investment values of the country to $1.864 billion.

The outflow of the investment was recorded from equity markets and government securities, which is taking its toll on the FDI inflows in the industries.

The current economic and business scenario has compelled foreign investment to divest their money from financial instruments. The situation is likely to continue in the near future until the global economic crisis is not settled with the control of COVID-19 spread.