Despite economic overhaul, FDI in Pakistan continues to fall

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  • The FDI dropped by 58 percent within the first two months of the ongoing fiscal year.
  • Inflows from China have drawdown the overall investment sums as inflow of investment from China during the last two months fell to $28.9 million compared with $216 million.
FDI_Pakistan_declined
Photo courtesy AFP.

Security was considered the major dynamic factor in deciding the magnitude of Foreign Direct Investment in the recent past but the current rupee depreciation against the dollar also appeared to tighten the noose around the FDI.

Despite having the huge economic potential Pakistan still unable to explore it accordingly and unsuccessful in attracting the foreign investor as yet. PTI Government promised to establish the ease of doing business within the country but the downpouring figures exhibit otherwise.

The FDI dropped by 58 percent within the first two months of the ongoing fiscal year as compared to the investment coming in the same period of the last fiscal year.

The Central Bank’s data showed that the slowdown of inflows from China has drawdown the overall investment sums as inflow of investment from China during the last two months fell to $28.9 million compared with $216 million whereas inflows during August clocked in at $33.4 million.

Country-wise Foreign Direct Investment coming to Pakistan – photo credit The Express Tribune.

A considerable drop in the FDI

According to the report of State Bank of Pakistan, FDI dropped 58 percent to $156.7 million in July, and August 2019-20 compared to $3776.9 million in the same period of the last year. In August alone FDI shrank from $197.9 million in August 2018 to $83.4 million in August 2019.

The decreasing number of inflows of foreign investments is not a good sign as the country’s economy is already confronted with fiscal challenges in multiple sectors of the economy. The declining imports have made the country’s imports lower in comparison to the exports but no major development is evident in the export sector so far.

As far as direct investment from the UK is concerned, it dropped this year to $22.8 million from $65 million during the last year, Pakistan Today reported. Money channeled into firms engaged in oil and gas explorations, trade, and financial business remained low according to the findings of the central bank.

Also See: Car Sales In Pakistan Dropped By 41 Percent This August

Multinational firms invested $21.3 million the oil and gas exploration sector in July-August FY 20 compared with $44.5 million during the same months a year ago. Financial businesses fetched $10.1 million in the starting two months of the current fiscal year compared with $26.5 million last year.

Suggest some ways to attract foreign business to Pakistan excluding the options of security, and currency stability? Share your thoughts in the comment section below

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