Why FDI dips 42pc as Chinese investment declines ?

Why FDI dips 42pc as Chinese investment declines ?





KARACHI: Foreign direct investment (FDI) declined by 42 per cent during the first quarter of current fiscal year compared to the same period last year falling short of even half billion mark.
Central bank’s data revealed that FDI during July-September FY19 clocked in at $439.5 million compared to $765m last year. Pakistan desperately requires foreign exchange inflows to cap the rising current account deficit.
The decline in inflows comes at a time when Pakistan’s depleting foreign exchange reserves have already fallen to alarmingly low levels at $14.6 billion including State Bank of Pakistan’s (SBP) $8.089bn providing enough only for two months of import cover.
The government has officially approached the International Monetary Fund to borrow $12bn to meet the growing foreign exchange requirements.
The outflow of portfolio investment also deteriorated the overall foreign private investment in the country which fell by 63pc in first quarter. An outflow of $185m was observed in the foreign portfolio investment (FPI) during the quarter under review compared to $78m in the corresponding quarter last fiscal year.
The overall FPI during the quarter declined by 63pc reaching $254m compared to inflows of $687m in the first quarter of last fiscal year. In tandem with last few quarters, China led the list of countries pouring investment into Pakistan.
The Asian giant made up for 64pc of the total FDI during the quarter contributing $281m. However, in comparison with the same period last fiscal year, China’s investments in the country dipped by 43pc during the period under review.
Following China, United Kingdom contributed $51m, US $25m and Switzerland $39.6m.
The present government has announced its plan to develop investment friendly policies to attract foreign investments while it also ensured to reduce cost of doing business in Pakistan.
Published in Dawn, October 19th, 2018

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Why FDI dips 42pc as Chinese investment declines ? Why FDI dips 42pc as Chinese investment declines ? Reviewed by Muhammad Arshad on 00:18 Rating: 5

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