FDI increases 7.5pc in July-August period

KARACHI: Foreign direct investment (FDI) into Pakistan has increased by 7.5 percent during the first two months of the current fiscal year 2015/16, according to the figures issued by the State Bank of Pakistan (SBP) on Tuesday.
Pakistan received $119.3 million in FDI during July-August FY16 as compared to $110.9 million in the corresponding period of the last fiscal year.
Analysts credit rising FDI inflows with improving foreign investor’s confidence in the country’s economy.
However, the growing energy demands make the country an emerging investment destination for the foreign companies, operating in the power generation.
The SBP data revealed that capital investment into Pakistan, with the power sector investments accounts for $111.1 million — a first of the total in two months of this fiscal year. Transport was the second key sector, attracting $20 million in investment; followed by oil and gas exploration with $19.3 million.
The multinational companies poured $92.7 million in the coal-fired power projects of the country.
Analysts foresee that the inward investment in the energy sector continue to increase, as the government is also planning projects in this sector, especially under China-Pakistan Economic Corridor.
During the period under review, the country received foreign inflows amounting to $318 million and outflows of $198.7 million.
Analysts said that the FDI witnessed these outflows due to repatriation of the earnings by the foreign investors.
Contrary to the July-August, the numbers for August 2015 remained dismal where FDI declined to $44.3 million as compared to $78.8 million in August 2014.
Early indications point to FY16 would be the positive year for the FDI on account of improvement in internal security and continued macroeconomic stability.
These are likely to increase the prospects for long-term foreign capital inflows.
Implementation of infrastructure development and energy projects under China-Pakistan Economic Corridor would further enhance the improving investment environment.
However, some analysts predict the FY16 outlook for FDI in Pakistan flat. They believe that it does not signal any significant change in the pattern.
Net foreign investment in the country fell a whopping 79.9 percent to $37.7 million in July-August FY16.
Foreign portfolio investment in July-August FY16 dipped by a staggering 163.9 percent, as the investors pulled out $72.6 million from the equity market during the period under review.
China was seen the biggest investor having investment of $131.5 million in July-August FY16.
Investment from the UAE stood at 30.2 million, from the United Kingdom it amounted to $16.1 million.
However, an amount of $96.7 million was flown out by the US investors during July-August this year.