FDI drops by more than 71%, despite China’s increasing contribution

China continues to lead the FDI numbers in Pakistan as CPEC Projects enter second phase.[FM1]  According to the latest data revealed by State Bank of Pakistan, China topped the list of countries with total foreign investment in Pakistan during the month of December followed by US and Hungary.

China’s total FDI during the month of December reached a sum of 128.4 million USD increasing the cumulative for the period between July to December, 2017 to 972.3 million USD. China’s total contribution to the total inflows in the economy has reached to alarming levels raising red flags for the country to diversify. US net FDI inflows reached 19.7 million coupled with 38.3 million FPI inflows. Hungarian investment during the month reached 15.7 million.

Investors continue to fret over the rising political instability in the country after as PAT Protests culminate right before the announcement of interim government. The year 2018 will remain an extremely sensitive year for the country as Pakistani tackled some of her most difficult challenge transferring power to the next Government via a democratic process.

Pakistan has increased her dependency on China which is visible in the number, more than 77.5% of the total inflows during July to December, 2017 came in from China; USD 972 million of the total USD 1.253 billion. Trailing behind China, US contribution to the total inflows also saw an increase, despite Trump’s tirade on Twitter, reaching 530 million USD during the last six months against -68.7 million during the same period last year.

Energy, construction and financial businesses received the highest chunk of FDI inflows during December.

Oil and gas explorations received net $26.2 million, power projects $25 million, construction $78.6 million and financial businesses $31.5 million.

Cumulatively, duirng the first-half of the current fiscal year, FDI decreased around 2.8% to $1.38 billion from $1.42 billion in the same period last year.