Chinese investment in Pakistan


 The Foreign Direct investment (FDI) continues to show encouraging growth trend as in the first two months of current fiscal year (July-August), 2MFY18,

China topped as the single largest foreign investor in Pakistan with total investment of $262.4 million made during the period of July-August 2017, up from $186.7 million invested in August 2017, according to the data released by the State Bank of Pakistan.

The contribution of Malaysia to Foreign Direct Investment was second biggest to the tune of $110.8 million, which is far higher than the investment of $1.3 million made during the same period of last fiscal year 2MFY17.

Other major contributors to the FDI were France $19 million, UAE $18.6 million, Japan $16.6 million, Hungary $13.3 million, United States of America $13.6 million, and United Kingdom invested $9 million during the first two months of current fiscal year.

Pakistan is currently suffering due to constant energy shortage, which has multiplied the cost of industrial input and pushed the country far behind other export competitors, resulting in decline in exports.

However, during the current fiscal year the power sector has attracted a major chunk of investment, which is evident from the inflows of foreign investment of $215.2 million. The major chunk of investment was made in the coal sector, which stood at $ 171.1 million, thermal $20.7 million and hydroelectric $23.4 million. In August 2017, the power sector attracted $158.6 million while in July 2016 the sector had received only $26.1 million, SBP data shows.

The other prominent sector to attract foreign investment was construction, which received $61.2 million.

The communication sector received $115.1 million during 2MFY18 while financial businesses attracted $14.9 million during the same period.

Trade received $5.6 million, construction $2.3 million, and transport equipment received $8 million of which cars manufacturing sector attracted $7.6 million.

During the last fiscal year FY17, overall volume of investment was $2,410.9 million as the China stood out single biggest investor with total investment of $1,240.3 million.

The foreign investment in Pakistan remained subdued due to many reasons including the law and order situation. However, the investment, in the backdrop of ongoing mega projects under the China-Pakistan Economic Corridor (CPEC), mainly from China is gradually increasing, which is likely to attract other countries to reap the financial benefits of the mega project