Foreign Direct Investment (FDI) in Pakistan rose sharply, ie, by 137 percent YoY during the first nine months of this fiscal year (FY20).
The State Bank of Pakistan (SBP) Monday reported that Pakistan fetched FDI amounting to $2.148 billion during July-March of FY20 compared to $905 million in the same period of last fiscal year (FY19), showing an increase of $1.243 billion.
This high growth was the result of lower outflows as the gross FDI inflows worth $ 2.69 billion during this fiscal year remained close to $2.146 billion received in the same period previous year. However, the outflow was $548.5 million during July-March of FY20 versus $1.242 billion in the corresponding period of last fiscal year.
The power sector continued to attract significant inflows due to ongoing work on the CPEC-related projects. During the period under review, power sector emerged largest recipient with $757 million FDI against $351 million outflow last year. Within the power sector, Thar Coal Block-1 (power plant) and Suki Kinari hydropower station projects fetched $ 152 million in FY20.
In addition, telecommunication sector ranked second with $490 million investment. The SBP said that a one-off inflow of $ 478 million was fetched by three mobile phone operators for renewal of their operating licenses in Pakistan, which also aided in the growth in net FDI during current fiscal year.
Foreign fund managers also massively invested into T-Bills and PIBs due to favorable exchange rate and healthy returns offered by Pakistan on the government securities. However, during March 2020, foreign investors divested some $1.8 billion from foreign public investment.
The SBP data showed, portfolio investment stood negative with $103.6 million outflows during July-March of FY20.
Total foreign investment, including FDI, portfolio investment and foreign public investment was $2.376 billion in first nine months of this fiscal year compared to $495 million in same period of FY19, depicting an increase of 380 percent or $1.88 billion.
The SBP has recently suggested that to attract and sustain higher FDI inflows in the country, reform-related efforts need to be prioritized as FDI is intrinsically linked to the county's ability to expand its manufacturing and export base in the medium term.
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