FDI clocked up $1.7bn in July-April
KARACHI: Despite CPEC, data does not reflect a substantial increase in foreign direct investment (FDI), which went up 12.7 per cent to $1.7 billion in July-April, the State Bank of Pakistan (SBP) reported on Monday.[TOP]
Details of inflows show that FDI from China constituted more than 40pc of total investment as most others were reluctant. Only a few companies, like Engro, could attract non-Chinese investment in July-April.
FDI from China was $718.3m followed by the Netherlands that invested $466.4m. Other significant investors were France ($171m) and Turkey ($133m).
Since the beginning of its term, the present government has played up Chinese investment while ignoring other international investors. This was also the reason for the government`s failure in its privatisation drive.
The government`s failure to privatise public-sector enterprises cost the exchequer hundreds of billions of rupees, which led to higher government borrowing.
FDI details show Pakistan has so far received the highest investment in the food and power sectors.
Interestingly, investment in the power sector in 2016-17 is not limited to the thermal segment.
Within the power sector, coal received $233m investment, followed by thermal ($114.3m) and hydel ($75m). The oil and gas exploration sector received $117m investment in July-April.
There are reports that Chinese companies have shown interest in developing housing projects in major cities of Pakistan. The SBP reported that the inflow in the construction industry was $356m during the first 10 months of the current fiscal year. FDI in the construction industry was just $44m during the same period a year ago.
The booming construction industry has already resulted in a manifold increase in land prices as housing gets out of the reach of middle and lowermiddle classes. The involvement of foreign investors can further escalate land prices.
Encouraging bank loans can herald a new era in the housing sector. Banks help people buy housing units on credit. This means home buyers pay back their banks in instalments over a 20-year period.
The SBP reported portfolio investment remained minus-$388m in July-April, although the equity market index recently touched its all-time high.