Foreign direct investment in the country saw an uptick in March 2023 – a rise of almost 62 percent month-on-month. Also the FDI was the second highest in March 2023 during the ongoing fiscal year (FY23). Even on the year-on-year basis, net FDI in the country stood at $163 million in March 2023 while net FDI was negative (outflow) at $30 million in March 2022.
These sure are improvements in foreign direct investment numbers whether year-on-year or month-on-month. But a lot has to happen before one can say that the FDI landscape in the country is on a recovery track –a single month of some improvement won’t do. Moreover, looking at 9MFY23 figures, FDI was lower by 16 percent year-on-year, which China as the largest investor accounting for almost 23 percent of total net inflows during the period.
Unfortunately however, besides China, and that too because of CPEC, foreign investors from no other country have made any significant investment in Pakistan’s economy in a long time. And the recent economic and political turmoil has created a vacuum where the prospects of foreign investment are not sanguine. Political instability and investment cannot co-exist, which is adding immensely to the challenges that were previously faced by the foreign investors.
Some recent developments might help to move the needle in inflows from EU as the businesses and individuals in Pakistan are no longer subject to Enhanced Customer Due Diligence (ECDD) after the EU removed the country from its list of high-risk countries. This step is the after effect of Pakistan’s removal from FATF grey list. Previously, Pakistan was made part of the countries subject to ECDD in 2018, which brought a lot of challenges for the foreign investors and exporters.
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