FDI in Pakistan jumps 15.6 pct on massive Chinese inflows

By APD writer Muhammad Sohail

**ISLAMABAD, March 17 (APD) ** -- Pakistan’s foreign direct investment (FDI) surged by 15.6 percent during July 2017 to Feb. 2018 largely drawing strength from massive Chinese inflows under China-Pakistan Economic Corridor (CPEC), according to the data released by State Bank of Pakistan.

The FDI during the said period of eight months increased to 1.941 billion U.S. dollars from 1.678 billion U.S. dollars a year earlier.

In February 2018 alone, the FDI inflows were recorded at 340.8 million U.S. dollars, compared to 146.7 million U.S. dollars in the corresponding month of last fiscal year.

During the period under review, the FDI inflows from China reached 1.281 billion U.S. dollars, an increase of 139 percent over the same period of the last fiscal.

On the other hand, investments from the United Kingdom rose to 205.5 million U.S. dollars against 139.9 million U.S. dollars last year, whereas inflows from Malaysian firms increased to 121.3 million U.S. dollars from 16.7 million U.S. dollars year ago.

Most of the investment went into power, construction and financial sectors.

Analysts expect that foreign direct investment to be up to 3.5 billion U.S. during the current fiscal year July2017-June2018, reflecting surging Chinese investments under CPEC, a flagship project of China’s Belt and Road Initiative.

“Since Pak-China relations are very deep-rooted and strategic in nature that’s why the flow of FDI is rising, but our traditional foreign investors appear to have shied away from Pakistan which is not a good sign,” said Ashfaque H Khan, renowned economist and dean at NUST School of Social Sciences, Islamabad.

The FDI data was released after the International Monetary Fund’s (IMF) Extended Fund Facility post-programme monitoring report showed the external sector imbalances were likely to elevate further this fiscal year owing to widening current account deficit.

“Despite the continued recovery of exports and some moderation of import growth, the current account deficit is expected to widen to 15.7 billion U.S. dollars (4.8 percent of GDP) this year,” the IMF said in the report.

The FDI from China under CPEC could help improve depleting foreign exchange reserves as the country’s account remained negative.

(ASIA PACIFIC DAILY)