FDI inches up to $648m

Foreign direct investment (FDI) rose by around over five per cent year-on-year to $648 million during the first seven months (July-January) of 2015-16, the State Bank of Pakistan (SBP) said on Tuesday.

However, the inflows were still disappointing as some foreign companies have started withdrawing their investment from the country.

FDI, which remains low under the elected governments, has been falling sharply for the last six years. In 2015, the inflows were hardly 50pc of what they had been a year before.

The record high foreign exchange reserves of over $20.3 billion and relatively stable exchange rate did not earn the confidence of global investor in Pakistan.

FDI from China was $409m, 63pc of the total inflows. On the other hand, the United States withdrew net $86.5m, while the net disinvestment by Saudi Arabia was $74.4m.

More pathetic is the overall foreign private investment, which fell by 57pc to $336m during July-January FY16 indicating massive outflow from the equity market. The portfolio investment fell by $311m (net outflow), while in the same period of last year there was an inflow of $165m.

The low foreign investment, particularly low FDI, has a damaging impact on country’s foreign payments. Despite having sufficient forex reserves, the country is still facing a current account deficit, which, according to another SBP report, reached $1.267bn in July-December.

After China, the largest inflows came from the United Arab Emirates ($98.5m), Hong Kong ($94m) and Italy ($61m).

Despite the fact that multiple donors have appreciated Pakistan’s economic performance, foreigners are still reluctant to invest in the country, data showed.

[Source:- dawn]