Foreign investment in Pakistan down 22%

The total foreign investment plunged by 22% in the first month of this fiscal year, reported the latest data from the State Bank of Pakistan (SBP).The total investment fell to $107.2mn during July, lower by 21.64% over $136.8mn recorded in same month of the previous year.This could possibly be a worrying sign for the government which has been met with a severe shortage of dollars since coming into power, thanks to the massive current account deficit.This was led by net foreign direct investment (FDI) of $73.4mn during the period under review, plummeting by 57.79%, from $173.9mn.On the other hand, portfolio investment was down 19.66% to $33.9mn, as against a net outflow of $42.2mn in July last year.2018-19 proved to be a dismal year for inflows as annual FDI dipped 61% to a modest $1.251bn, down from $3.23bn in FY18.This massive decline paints a negative picture for investors who are cautious about their investment which has been on a downward trajectory for several years.Perhaps the most noteworthy element of the data is the continued downward trend of Chinese investments to Pakistan, which in the wake of China-Pakistan Economic Corridor reached record highs.In July, there was a net outflow of Chinese investment at $4.5mn, as compared to an inflow of $90.6mn in same month last year.Recently, Prime Minister Imran Khan iterated that all CPEC projects will be completed in time but there is a growing feeling among the business circle that China has slowed down its economic activities here.United States was the biggest source of inbound investments during the month, registering net FDI of $16.6mn in July, as against $14.4mn in same period last year.Malaysia came in a close second with net inflows of $14.6mn, compared to just $2.5mn in same period last year.Meanwhile, net from the United Kingdom plunged by 78.9% to $11.1mn, from $52.7mn in July last year. The biggest outflow was noted from Kuwait at $16.7mn, which continued July 2018 trend when the figure stood at $13.8mn.Sector-wise, oil and gas exploration recorded the highest net FDI of $13.2mn in July, down from $19.6mn in same month last year.This followed by textile where net investments were recorded at $10.7mn and pharmaceutical and OTC products at $10.3mn.On the other hand, power sector posted an outflow of $14.4mn.