Chinese FDI into Pakistan surges by over three-fold since 2014

By APD Writer Muhammad Sohail

ISLAMABAD, Oct. 11 (APD) -- China has emerged as the biggest cross-border investor in Pakistan as the foreign direct investment (FDI) inflows from China increased by more than tripled during last three years, a report said on Tuesday.

According to a report released by the KPMG Pakistan, a financial institution, the investment increased from 319.1 million U.S. dollars in the country’s fiscal year July 2014 to June 2015 to 1.185 billion U.S. dollars in fiscal year July 2016 to June 2017.

An increased level of Chinese FDI followed the China-Pakistan Economic Corridor (CPEC) under its One Belt and One Road initiative within the fiscal year of 2016-17 when investment increased to 1.185 U.S. billion dollars from 1.063 billion U.S. dollars in 2015-16.

The CPEC, an estimated 50 billion US dollar project, encompasses infrastructure projects involving highways, railways, and pipelines along with several energy projects and the establishment of special economic zones in Pakistan.

Mostly, electricity generation and infrastructure sectors are attracting more Chinese money to Pakistan, the report said.

Foreign businesses operating in Pakistan see a surging Chinese investment as a positive sign for the country.

Commenting on the report, an official of Overseas Investors Chamber of Commerce and Industry (OICCI) said “It is a fact that FDI from China has spiked in the past few years mainly in power and infrastructure sectors. It is very positive news and has created positivity in the business environment, leading to renewed interest from other international investors.”

Pakistan has welcomed the Chinese assistance with open arms, especially in the wake of CPEC. However, direct investment in Pakistan from the U.S. firms fell to 68 percent during this period.

There is need to pay attention to positive fundamentals, including the country’s growing middle class, availability of skilled and semi-skilled workforce, as well as the geographical location.

In terms of FDI, currently, Pakistan severely suffers from negative perception which is definitely worse than the actual reality.

Available statistics indicate that following the improvement in the security environment in Pakistan, an increasing number of foreign business visitors have been visiting the country during the last couple of years.

(ASIA PACIFIC DAILY)