Despite the claims of economic recovery, improvements and stablisation, the foreign direct investment (FDI), in Pakistan dropped 58% in the first two months of current financial year 2019-20. It seems that foreign investors want to wait for a while before making decision to invest in new projects in Pakistan. Foreign investors invested $376.9 million in the same period of last year (financial year 2018-19), according to the State Bank of Pakistan (SBP) data. In August 2019 alone, the FDI shrank 58% to $83.4 million compared to $197.9 million in August 2018.
Some experts think that government is not coming out of wait and see mode to attract foreign investment. It is the matter of great concern that foreign investors are coming to Pakistan for making the new investments. Time has come to get rid of the wait-and-see approach and take action. They should identify areas where Pakistan wants new foreign investment and market such projects aggressively through roadshows and conferences across the world.
According to the World Bank’s report, the Asian region has continued to attract most of the FDI across the world. Pakistan luckily exists in the region but has been unable to attract its due share despite having a high potential to invite new foreign investment in different sectors of the economy.
The Vietnam, Cambodia, Indonesia and the Philippines are attracting FDI, then what was wrong with Pakistan, which had a huge potential to attract new investment. “Pakistan remains a developing economy. It still needs to launch projects in a number of sectors. For example, its railways, engineering and re-export sectors have enough potential to attract FDI.
Foreign investors, however, have started returning to the Pakistan Stock Exchange (PSX) with the beginning of the new fiscal year on July 1, 2019. A massive drop in share prices may have encouraged them to invest in the stock market.
Foreign investors invested $107.3 million in the PSX in July and August 2019 compared to divestment of $129.6 million in the same period of last year.
The stock market has recorded foreign inflows after recording an outflow of over $1 billion in the past four consecutive years.
China remained the largest investor in Pakistan. It invested $28.9 million in the two months – July-August 2019. However, the new investment was sharply lower than the $216 million it invested in the corresponding period of last year.
The United Kingdom remained the second largest investor with $22.8 million compared to $65 million last year. Malaysia, which has emerged as a new big investor in Pakistan in recent months, came at the third place with investment of $19.6 million compared to $5.1 million in the previous year.
Oil and gas exploration sector attracted the single largest FDIs of $21.3 million in the two months; July and August 2019 compared to $44.5 million in the same period of last year. Hydel power projects attracted $18.7 million compared to $21.2 million.
Cars manufacturers received $17.5 million in the two months compared to $19.7 million in the corresponding period last year.
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