FDI rises 48pc to $771m in Q1FY25

KARACHI: Pakistan’s net foreign direct investment (FDI) increased by 48 per cent to $771 million in the first three months of the fiscal year 2025, the central bank data showed on Monday.

The country received a net FDI inflow of $385 million in September, which was 81 per cent higher than the $213 million inflow in the same period last year, and 54 per cent higher than the $250 million inflow in the same month last year.

According to the SBP’s data, China accounted for the majority of direct investments into the country. The FDI from Chinese companies increased by 147 per cent to $404 million in July-September FY25. On the other hand, investments from Hong Kong and the United Kingdom remained flat at $99 million and $72 million, respectively during the first quarter of the current fiscal year.

FDI in the power sector increased by 128 per cent to $416 million in July-September FY25. Financial businesses received $127 million FDI in July-September FY25, compared with $150 million a year ago. FDI in the gas and exploration sector rose 23 per cent to $97 million in July-September FY25.

Cross-border investment in Pakistan has fluctuated over the last four to five years due to economic and political instability. However, these investments improved due to the restoration of economic stability in the country following the completion of the International Monetary Fund’s $3 billion loan programme in April this year.

In its most recent staff report, the IMF, however, asked Pakistan to stop establishing any industrial zones that provide investment incentives. Islamabad’s attempts to draw in more Chinese industries may be hampered by this IMF demand.

The country had planned to build at least nine special economic zones (SEZs) under the China-Pakistan Economic Corridor (CPEC) project that are at various stages of development.The IMF stated that Pakistan will refrain from providing incentives such as tax breaks and subsidies to any new or existing special economic zones. This will help provide a level playing field for investment.