FDI in Pakistan – shrinking and depleting

INTERNATIONAL DESK: Foreign direct investment in Pakistan has been continuously falling and the September 2022was no different – maybe worse. The country attracted around $110million foreign direct inflows duringthe month that were down by 60 percent year-on-year.

The outflows for the months stood at $63 million, rising by 130 percent year-on-year, and leaving being net FDI to less than $84, down by 66 percent year-on-year. Net FDI in September on a month-on-month basis too depicted a decline of 24 percent.

On an overall basis, FDI in 1QFY23 as per SBP’s aggregate data also declined by 47 percent year-on-year. The decline in FDI came from a weak FDI from key investing countries including China, USA and the UK. Whereas, UAE was the largest contributor during 1QFY23. Nonetheless, China also continued to be among the top contributors, landing second during 1QFY23.

Sector wise, it can be seen that majority of FDI came in the power sector followed by the financial sector and the oil and gas sector. However, on a year-on-year growth basis, only power sector depicted a rise of around 49 percent; while FDI in financial business, telecommunication and oil and gas sectors declined significantly.

FDI ininformation technology sharply fell by 75 percent year-on-year in 1QFY23. While that in oil and gas and financial business was down by 70 percent and 41 percent, respectively.

The ongoing political and economic uncertainty have been further adding to the slowdown in foreign investment in the country. While the removal from the FATF grey lists is being considered to remove a roadblock for FDI, issues like inconsistent policies, unstable currency, high taxes, and the ongoing uncertainty will hold investor back from putting money into the country. (Business Recorder)