Masroor Afzal Pasha
The net Foreign Direct Investment (FDI) witnessed a substantial growth of 84.5 percent during the period of July to February of the financial year 2017-18 compared with the corresponding period of last financial year, according to the State Bank of Pakistan (SBP).
Overall, the country received a net FDI of $4.297 billion in July to February as compared with $2.33 billion net FDI reported in the same period of last financial year.
The growth in net FDI was witnessed due to significant inflows in FPI which surged to $2.45 billion after the floating of foreign bonds in the international market. On the other hand, FDI of the real sector recorded a growth of 16.5 percent to stand at $1.94 billion during the period under review.
Foreign Portfolio Investment (FPI) is made in equity and debt securities and is the major component of net Foreign Direct Investment. On the other hand, the FDI is carried out in the real sector with long-term impact on economy and industries of the country.
Besides, investment from equity market showed an outflow of $93 million in the said period. Analysts were of the view that FDI will continue to pour in Pakistan due to the economic activities stirred up by mega-billion dollar project of China-Pakistan Economic Corridor (CPEC).
They were of the view that FDI inflows are likely in Pakistan from different countries especially in sectors like power, oil and exploration, real estate and construction, food, financial business, and telecom.
China is the biggest contributor of FDI. Investment inflows from China are largely focused in real sectors such energy and infrastructure at around $1.284 billion during the eight months of the financial year 2017-18. Besides China, major contributors of the net FDI are the United Kingdom with $205 million, Malaysia with $121 million, the United States with $65 million respectively.
Sectors witnessed investment inflows are power with $711 million and construction with $470 million, Financial Sector with $229 million and oil and gas exploration and production with $1,384 million