Most headlines had it that FDI to Pakistan in July 2017 went up by a staggering 162.8 percent, year-on-year. Fact. Only that FDI should not necessarily be analyzed on year-on-year basis. All said, $222 million FDI in July 2017 further consolidates the momentum that has been built particularly since January 2017, as the monthly FDI, has since averaged close to $200 million.
Power sector continues to be recipient of handy foreign investment, accounting for one-fourth of the total. Amongst countries, China continues to stay prominent, contributing one-third of July FDI. Now comes the surprise. Both China and power sector sit second on the respective lists. Malaysia was the largest FDI contributor in July with $91.6 million. Trade sector was the largest FDI recipient with $93.9 million.
It comes as a pleasant surprise, as both Malaysia and trade haven’t exactly been setting Pakistan’s FDI scene on fire. The FDI from Malaysia for last five years combined stands at a grand total of $4.3 million.
That for the trade sector for the same period is a healthier $130 million – but still makes the $91 million monthly figure looks great. All of it points towards this being a single investment transaction, in the trade sector, from Malaysia.
This column does not know for sure, if that is the case. For one, the SBP’s response was not very warm, on being contacted. Secondly, what falls under ‘trade’ is not completely known either.
In other news, edotco PK – subsidiary of Malaysian telecom conglomerate Axiata Group, has completed its acquisition of Tanzanite Tower Private Limited. The acquired company is Pakistan’s largest company in the telecommunication tower and infrastructure sharing category, operating over 700 towers. The acquirer is Malaysia’s largest and Asia’s first in terms of telecommunication infrastructure services. The deal was closed at $88.9 million, according to the filing by Axiata.
Malaysia, trade, and $90 million all ring a bell together. Only that telecom tower sharing business does not exactly look like falling under the trade category.
A look at more established investment category details reveals that there is little chance of this being considered under trade. On the flip, it has to be a symmetrical coincidence of the highest order, for this to be anything other than the edotco deal. And if it is, brace yourselves for another identical inflow from Malaysia.
Other than the Malaysian surprise, there is nothing much that has changed, as the China story continues. The priority investment sectors are likely to continue attracting sizeable Chinese FDI, unless Pakistan also faces a reality check of the fresh Chinese policy of OBOR related outflows.
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