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FDI down 35.1% to $1.39 Billion in July-March - Inside Financial Markets

FDI down 35.1% to $1.39 Billion in July-March

– The News

 Foreign direct investment (FDI) slumped 35.1 percent to $1.395 billion in the nine months of this fiscal year, largely because of extended virus fallout, data showed on Monday.

It stood at $2.150 billion in the same period of last fiscal year, according to State Bank of Pakistan (SBP).

The country drew $167.6 million in FDI in March, down 39.8 percent from a year earlier.

FDI inflows from China and Hong Kong and Netherlands fell from a year earlier, and those from the United Kingdom increased in July-March FY2021, the State Bank of Pakistan’s figures revealed.

The net FDI inflows from China declined to $650.8 million in July-March FY2021 from $859.3 million a year ago and from Hong Kong they fell to $105.7 million from $135.1 million.

Inflows from Netherlands also fell to $65.4 million from $84 million.

Oil and gas explorations inflows were $158.3 million in July-March FY2021, down from $218.3 million a year earlier.

Though, the power sector was the largest recipient of FDI, but the investment from China to finance the energy projects under the China Pakistan Economic Corridor (CPEC) slowed down.

FDI in this sector declined to $737.8 million in July-March FY2021 from $742.4 million a year ago.

Telecommunications sector pulled $62.6 million FDI from the country in the nine months of this fiscal year, compared with an inflow of $464.8 million last year.

FDI in financial businesses fell to $192.1 million from $210.5 million.

Analysts said the FDI in Pakistan declined owing to a slowdown in the world economy amid new waves of coronavirus pandemic.

The investments in CPEC energy and infrastructure projects have also slowed down.

The IMF in a recent staff report, citing the government, said it was taking steps to improve the business environment.

“In particular, we will simplify procedures to start a business and eliminate other unnecessary regulations, including the introduction of one portal for all business registrations and integration of federal and provincial entities involved in starting a business; streamline the approval process for foreign direct investment; improve trading across borders by reducing customs-related processing time and reducing hours to prepare import/export documentation; simplify and harmonise the process of paying

taxes through the introduction of a simple and fully automated regime for paying taxes, contributions, and fees; and launch a communication drive to disseminate information regarding the reforms undertaken,” the government told the IMF.

Syed Zaki Hussain

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