Foreign direct investment to Pakistan drops 17% in first five months of FY2021: SBP

Foreign Direct Investment (FDI) to Pakistan has dropped to $717.1 million during the first five months of the fiscal year 2020-2021, according to data released by the State Bank of Pakistan. This represents a drop of 17 percent when compared to the same period last year.

FDI attracted by Pakistan during the first five months of the fiscal year 2019-2020 stood at $864.4 million.

While there has been a healthy flow of remittances from overseas Pakistani courtesy of the Roshan Digital Account, which attained its highest amount in a single day almost a week ago, the inflow of foreign investment has been deplorable.

Back in November, there was a sudden drop in FDI inflows to Pakistan largely because the country pulled out of investment deals with China and Norway. Therefore, while the FDI inflows for November 2019 stood at $192.4 million, Pakistan ended up facing outflows worth $16 million during the same month this year.

China pulled out $218.6 million, while Norway retracted $55.8 million from Pakistan last month.

Norwegian firms also took away $26.6 million in July-November FY2021 against the inflow of $318.5 million in the same period last year.

However, despite the outflows, net FDI from China remained positive for the overall five months of the current fiscal year, reaching a stable $253.9 million for July-November FY2021. As compared to the same period in 2019, this is approximately three times higher, as last year’s count stood at $76.5 million.

The power sector remains the biggest beneficiary of FDI, as it fetched $269.2 million in July-November FY2021 as compared to $66.6 million last year. On the other end of the scale is the telecommunication sector, with an FDI inflow of a mere $11.4 million during the first five months of the current fiscal year, which is a huge drop from the $333.2 million that it raked in last year.