Pakistan fetched over $ 1 billion Foreign Direct Investment (FDI) during the first five months of this fiscal year (FY18), supported by massive Chinese investment under the CPEC. China is the top contributor to FDI as its investment accounts for about 73 percent of the total FDI arrived during current fiscal year. Some construction, energy and infrastructure projects have received massive investment from China.
According to State Bank of Pakistan (SBP), the FDI maintained an upward trend and rose by some 57 percent during the first five months of this fiscal year on back of rising investment from China on account of the CPEC.
The country fetched FDI amounting to $1.146 billion during July-November of FY18 compared to $729.4 million in the same period of last fiscal year (FY17), depicting an increase of $417 million. During the period under review, FDI inflows were $1.365 billion against the outflow of $218 million.
FDI from China rose significantly over last year and with 275 percent increase, FDI from China stood at $841 million in July-November of FY18 up from $224 million in the corresponding period of last fiscal year. In addition to China, a significant amount of FDI also arrived from the US, which invested $482 million during the first five months of this fiscal year.
However, economists said that despite some increase in foreign investment, the FDI inflows were not sufficient enough to fully offset the widening current account gap. Pakistan generated $2.5 billion through the sale of Eurobond and Sukuk in the international market to build the depleting foreign exchange reserves.
According to SBP, during the period under review, portfolio investment witnessed a downward trend falling by 0.6 percent. Portfolio investment stood negative at $96.1 million in July-November of this fiscal year. Similarly, total foreign investment including FDI, portfolio investment and foreign public investment declined by 44 percent to $1 billion during the first five months of this fiscal year compared to $1.775 billion in the same period of last fiscal year.