According to recent data published by the State Bank of Pakistan (SBP), FDI in the country plunged by 45% during the first five months of the current fiscal year, compared to the same timeframe last year- from $840 million to $460 million.
The figures alone are sufficient to present a disappointing picture of the current economy. Over the past few months the country has been struggling to convince other nations to invest in local industries. Analysts believe that many investors hesitate to invest the country due to its never ending energy crisis and poor governance. While it was believed that the CPEC project would help to attract more investments, however, FDI keeps declining and Pakistan has recorded the lowest level of FDI in the past few years, primarily led by investments from Turkey and China.
Speculations suggest that the Government of Pakistan is planning to make massive changes in the economy in order to bring it on the right track.
It was reported that Turkey invested approximately $126 million, but this was a one-time investment as the FDI during the same period last year stood at $15.8 million. Also, China became the biggest trading partner of Pakistan during the past three years, but Pakistan still failed to make its way out from the list of nations across the globe receiving lowest FDIs.
FDI from the United States, United Kingdom and United Arab Emirates amounted to $60m, $39m and $63m respectively, while other investments were less than $30m. In addition, during the period under review power sector managed to muster highest investment at $145m compared to $16m during the same timeframe a year ago.
The second component of FDI in the country, portfolio investment, is experiencing a downward trend, but divestments are less than previous year ($95 million during the past five months compared to approximately $192.4 million during the same time period last year).