There’s no doubt that Pakistan has great economic potential, but high crime rate and political uncertainties had adversely affected the inflow of foreign investment in the country. Now, the security situation in Pakistan has improved significantly due to which foreign investors have started to consider Pakistan as an attractive investment destination. According to the data released by the State Bank of Pakistan (SBP) on Monday, foreign direct investment (FDI) surged 4.6% to $2.41 billion in 2016-17.
This shouldn’t come as a surprise that China has emerged as the top investor in Pakistan during the past three years with the onset of the China-Pakistan Economic Corridor (CPEC). For those who are wondering, FDI from China in 2016-17 was $1.18 billion, almost half of the total inflows received throughout the financial year.
Nevertheless, increasing investment from China is giving rise to not only hope, but fear as well. The existing regime believe that the CPEC will stabilize the economy in the long run. On the other hand, many fear that Chinese investment comes with a hidden agenda, which China will later use for its own benefit – such as setting up a military base in the country.
Moreover, a Dutch company recently bought a majority stake in Engro Foods for $463 million, which made Netherland the second biggest foreign investor.
Turkey invested $135 million, France $119 million, United States (US) $71 million and United Kingdom (UK) $69 million.
The United Kingdom had invested $151.6 million in 2015-16, which dropped to almost 50% in 2016-17. Furthermore, FDI from US increased to $71 million compared to only $13 million in 2015-16.
When compared to regional countries, Pakistan has been receiving smaller FDI over the past few years. According to a report, India received $62 billion while China received $59 billion in 2016.