The foreign direct investment (FDI) in different sectors of Pakistan increased to a seven-month high at $198.3 million in May 2021. This is 63 percent higher than the $121 million inflows recorded in May 2020.
Inflows for May 2021 were also higher on a monthly comparison, up 25 percent as compared to $158.4 million inflows in April 2021, SBP data showed
Overall, the Foreign Direct Investment (FDI) stood at $1.75 billion in the real sector from July to May FY21, which is less than 27.7 percent from the $2.42 billion recorded last year.
The FDI inflows were slightly lower than last year, and the main drop in net FDI was due to a sharp increase in outflows during the period. During the period under review, FDI inflows were $2.769 billion, down 10 percent, as against outflow of $1.01 billion, which rose 49 percent.
Greenfield investments were impacted, mainly due to the uncertainty about the global trajectory of COVID-19 cases, the risk of lockdowns, the scale and efficacy of the governments’ Covid-related support, and the rollout of the vaccination programs.
Moreover, multinational corporations (MNCs) also reduced their new equity investments.
China made a leading share in investment with $728 million. It is followed by Norway and United Kingdom with $147 million and $130 million. The major sector received FDI were power sector, financial businesses, and oil and gas exploration and production.
FPI Increases
The overall foreign investment, including FPI and FDI, stood at $3.95 billion by the end of 11 months of FY21. The investment might cross the mark of $4 billion in the next month.
The inflow of investment has surged to nearly $4 billion in the current financial year 2020-21.
This is being attributed to the Green Eurobonds, which attracted a handsome amount of $2.5 billion under the head of foreign portfolio investment (FPI).
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According to the statistics updated by the State Bank of Pakistan (SBP), the overall FPI during the period of July to May 2020-21 stood at $2.45 billion, after an amount of $5.2 million outflows were recorded in the said period. This shows an overall growth of 949 percent year-on-year.
The country raised the first Green Eurobond last month for 5 years, 10 years, and 30 years, at attractive rates varying from 6 percent to 8.8 percent, which received an overwhelming response from foreign investors.
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The bonds were oversubscribed subscribed, but the investment is a sort of borrowing, which has limited gains compared with the investment in various sectors.
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