Foreign direct investments maintained an improved position compared to the preceding year, with inflows recorded over $1 billion during the period of July to December 2021.
According to the State Bank of Pakistan (SBP), the FDI surged by 20% to $1.056 billion during the first half of the financial year 2021-22 as compared to $879 million inflows recorded during the corresponding period of the last financial year, showing a handsome growth of 20 percent year-on-year.
The increase in FDI inflows in various sectors of the economy reflected the reappearance of foreign investors in Pakistan’s market. FDI inflows remained high in the power sector with $363 million, financial business with $205 million, and the communication sector with $146 million.
It has been observed that various projects of the power sector are being developed by different utility companies for the purpose of power generation and distribution. These also include green power projects of solar and wind energy in different provinces, including projects related to CPEC.
The investment in financial business could be seen with the increasing interest of foreign investors in the growing fintech sector and finance-based startups. Similarly, the investment in the communication sector portrayed the development of telecom infrastructure and the setting up of mobile phone assembly lines in the country.
FDI received from major countries are China with $306 million, the USA with $149 million, and Hong Kong with $110 million during the period of July to December 2021.
On the flip side, the foreign portfolio investment in the country has been on the decline during the same period. The country witnessed a trend of divestment of $307 million foreign portfolio investment from the equity market. It also witnessed an outflow of $98.3 million from debt securities.
The confidence of foreign investment in the equity market has not improved much despite the fact the stock exchange witnessed the listing of various companies in the period under review. The divestment of foreign equity traders or investors could be attributed to the global situation in which investment and business climate saw an uncertain period once again due to the spread of the Omicron version of COVID-19.
The overall investment in the country after outflows stood at $651 million during the period of July to December 2021, which is 47 percent higher as compared to a similar period of the last financial year.