Foreign direct investment (FDI) upsurges 11.3pc in July-Jan FY2022

FDI stood at $1.167 billion for the period from July to January FY2022, compared with $1.048 billion in the corresponding period of the last fiscal year.

In January, FDI flows fell 35 percent to $110 million. Direct investment declined 50 percent month-on-month in January.

Major investment was poured into the financial businesses as foreign companies invested $230.6 million in this sector in July-January FY2022, compared with $160.3 million a year earlier.

The communications sector attracted $174.9 million in FDI. However, investors pulled $31.7 million from this sector last year. Net FDI in the oil and gas exploration sector rose to $161.8 million from $143.4 million last year.

The figures issued by the State Bank of Pakistan revealed that China remained the largest investor with net FDI of $360.4 million in the seven months of FY2022, compared with $432.6 million during the corresponding period last year.

United States remained the second largest investor with net FDI of $168.9 million in July-January FY2022, compared with $77.9 million invested by US firms last year.

The biggest source of foreign investment in Pakistan is the China-Pakistan Economic Corridor (CPEC). Under CPEC, Pakistan and China have initiated projects of 17,045MW of electricity, national level modernisation of roads and rail infrastructure, new optical fiber connect with China, development and commercialisation of Gwadar port and smart port city, four urban mass transit projects in major cities and nine special economic zones.

As most of the projects under the first phase of CPEC have been completed, there is a need to start the second phase of this programme to attract FDI from China.

The IMF, in its latest country report said, the structure of the financial account of Pakistan shows reliance on debt creating flows rather than on FDI. The Fund suggested that Pakistan should take steps to improve the business environment to increase direct investment from various countries.