Traditional investors pulling out on China’s increased presence?

Pakistan Economic Survey 2015-16 reveals that Pakistan could not attract Foreign Director Investment (FDI) as per potential during last few years.

The survey notes that due to a number of internal and external factors, FDI could not improve in the past; however it argued that at present the situation is improving on fast track due to better policies of the government.

During July-April of Financial Year 2016 net FDI was $1.02 billion – a growth of 5.4 percent from the previous year.

During the first ten months of current fiscal year FDI inflows reached $1762.3 million and in the same period outflows amounted to $746 million.

The survey states that the major FDI inflows are from China, the US, the UAE, Hong Kong, the UK, Switzerland, Italy, Austria, Norway, Luxembourg, Saudi Arabia, Japan and Singapore.

Power, oil and gas exploration, financial business, tobacco cigarettes, communications, beverages, chemicals, personal services, electronics, construction, petroleum refining and transport remained the main recipient sectors.

Most countries that had traditionally been the principal direct investors in Pakistan are now pulling out their investments after China has increased its FDI in the wake of increased economic cooperation under the China-Pakistan Economic Corridor (CPEC).

More than half of the total FDI that Pakistan received in July-April of 2015-16 originated from China alone. FDI from China amounted to $549.9 million.

The United States has traditionally been a big source of FDI, but US investors are now losing interest in Pakistan and are now pulling out their money.

US investors repatriated $75.7 million from Pakistan in the first 10 months of 2015-16. The largest increase in FDI in July-April was in the category of power, which attracted $518.1 million, up 208 percent from a year ago.

Other sectors that attracted a substantial FDI in the first 10 months of 2015-16 were oil and gas exploration ($234.8 million), telecommunications ($72.7 million) and beverages ($61.9 million).

The largest net outflow of FDI in July-April was recorded in petro chemicals (-$136.1 million) followed by metal products (-$48.9 million) and IT services ($22.8 million).  –Business Recorder