China becomes major FDI source for Pak as other countries exit

China has pumped in nearly USD 600 million in 2015-16 in Pakistan, almost half of the total FDI received by the cash- starved country last fiscal.

China has pumped in nearly USD 600 million in 2015-16 in Pakistan, almost half of the total FDI received by the cash- starved country last fiscal.

Pakistan received Foreign Direct Investment of USD 1,281.1 million in July-June, which is USD 358.2 million higher than FDI received in the preceding fiscal year, figures released by the State Bank of Pakistan (SBP) said. This was 38.8 per cent more than the FDI figure in 2014-15.

With almost all countries that had traditionally invested in Pakistan now pulling out their investments, China has increased its FDI as part of the China-Pakistan Economic Corridor (CPEC), Express Tribune reported.

Almost half of the total FDI that Pakistan received in the last fiscal year originated from China alone. Chinese and Pakistani leaders describe their strong bilateral ties as "all weather".

FDI from China amounted to USD 593.9 million in 2015-16, which is up 131.3 per cent from 2014-15 and constitutes 46.3 per cent of the total FDI Pakistan received over the entire fiscal year.

Pakistan, which has seen several terror attacks, has faced low levels of foreign investment in recent years. The SBP has called an increase in FDI 'imperative' for the sustainability of the economy's external sector.

China was followed by Norway (USD 172.3 million), United Arab Emirates (USD 164.2 million), Hong Kong (USD 130.9 million) and Italy (USD 103.5 million) as the largest contributors to FDI in 2015-16.

According to the SBP report, China has emerged as a dominant investor because of its interest in power projects.

Chinese companies have been interested in coal-based thermal generation, as it entails low unit cost compared to furnace oil and high-speed diesel, the SBP said. "Excluding power, FDI inflows into the country have declined," it noted.

The United States has traditionally been a big source of FDI, but that trend is changing now. As opposed to making fresh investments in Pakistan, it is now pulling out its money instead, the report said.

US investors have pulled out USD 65.5 million from Pakistan in 2015-16, although net inflows from the world's largest economy amounted to USD 208.9 million in the preceding fiscal year.

In addition to the US, other major outflows of FDI were from Saudi Arabian (- USD102.2 million), Egyptian (- USD 5.6 million) and German (- USD 33 million) investors in July-June, SBP data shows.

The largest net outflow of FDI in 2015-16 was recorded in petro chemicals (- USD 136.1 million) followed by metal products (- USD 59.1 million).

Pakistan received FDI of USD 709.3 million in 2014-15, which was 58.2 per cent less than the FDI received in the preceding fiscal year, the report said.

Largest contributor to the FDI during 2014-15 was the US (USD 238.7 million), followed by China (USD 229.5 million) and United Arab Emirates (USD 222.4 million), it said.

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