Pakistan faces Foreign disinvestment from US, UK and UAE in April

May 18, 2020 (MLN): Foreign direct investment flows dropped by 52.2% MoM to stand at $133.3 million in April’20 as the economy is taking a big hit amid COVID-19 pandemic.

This decline in foreign investment depends on the severity of the ongoing pandemic in major countries that invest in Pakistan.  According to the data released by State Bank of Pakistan (SBP), shows that among 5 top investors in Pakistan, the US, UK and UAE showed divestment except for China during the month whereas no investment or divestment was made by Norway in Pakistan during April 2020.

China which has been the top investors since few months due to its ongoing China-Pakistan Economic Corridor (CPEC) projects in Pakistan, its total investment into Pakistan amounted to $5.9 million in the month of April.

Investors from the US showed a largest disinvestment of $23.7 million during the month, followed by UAE investors that pulled out $12.3 million from Pakistan during April.

Next in line is Luxembourg and Ireland as their net outflows from the country stood at $ 9.4 million and 6.4 million respectively.

During the month, Hong Kong, Netherland, Malta, and Italy are the countries where Pakistan observed a decent investment compared to other major investing partners, as they brought a net direct investment of $28.4 million, $24.5 million, $18.5 million and $7.1 million into the country.

Cumulatively, during Jul-April FY20, Pakistan witnessed a total foreign investment of $1.86 billion compared to the divestment of $ 402 million recorded in the corresponding period of last year.

During Jul-April FY20, Chinese investors invested a net of $877.6 million, which is 22 times higher than the investment of $39.6 million made by China in Pakistan soil, followed by Norway with a net amount of 288.6 million, showing a twenty-five-fold rise in investment in Pakistan.

On the other hand, Foreign Portfolio Investment (FPI), which represents an investment in the equity market also painted a negative picture, as net FPI outflows during the month stood at $644 in April 2020. The United States emerged as the biggest withdrawal of portfolio investment during the month, as it withdrew $46.2 million during April 2020.

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