The inflows of foreign investment in the country recorded a healthy growth in the closing financial year FY 2019-20, crossing $2 billion with notable investors injecting money in different sectors.
The overall foreign investment inflows stood at $2.038 billion in FY20, which was much better than the previous financial year which portrayed a disappointing picture with a net outflow of $54.8 million as per data from the State Bank of Pakistan (SBP).
The second half of the outgoing financial year was very challenging due to the COVID-19 pandemic but it recorded handsome investments in Pakistan, which surged to $3.8 billion in February 2020 including various sectors and government securities. In later months, the investors divested nearly $4 billion from government securities due to the worldwide uncertainty and global economic slowdown.
Foreign direct investment (FDI) surged to $2.56 billion in FY20 with 88 percent year-on-year growth. FDI inflows are concentrated on long-term projects that will also generate positive economic impacts in different sectors. The foreign portfolio investment saw an outflow of $523 million in government securities and equity markets during the same period, which lessened the investment figure to $2 billion in FY20.
China is the major contributor to FDI mainly focusing on CPEC. It invested $843 million in Pakistan during FY20 as compared to $124 million in FY19. FDI inflows from Norway and Hong Kong were recorded at $401 million and $215 million.
The power sector was the most attractive for foreign investors with FDI of $754 million followed by telecom with $663 million, oil and gas exploration with $311 million, and financial business with $273 million.
Besides the government policies, the improvement in the security situation has played a tremendous role in bringing investment in various sectors. The post-COVID-19 situation is not predicated as favorable in the current financial year, however, the government policy on the housing and construction sector may attract investment.