According to figures from the State Bank of Pakistan (SBP), foreign direct investment (FDI) into Pakistan saw a net outflow of $30.4 million in March, compared to an inflow of $173.4 million in the same month previous year, as multinational firms (MNCs) took out some of their investment.
Analysts predict that the country will see net outflows after November 2020.
Meanwhile, due to a decrease in inflows from China, FDI slowed in the first nine months of the current fiscal year 2021-22, and MNCs invested less in several businesses.
According to figures issued by the central bank, the country garnered $1.285 billion in FDI between July 2021 and March 2022, down 2% from the same period a year before.
Despite the fact that Chinese inflows are decreasing in quantity, China remained the largest investor in July-March FY22, with net FDI of $334 million. In the same period the previous year, these inflows totaled $642 billion.
With net FDI of $183 million, the United States was the second largest investor. Between July and March of FY21, US companies invested $97 million.
The power industry, which has received the majority of net FDI in recent years, has begun to decline. In July-March FY22, investments in the power industry fell by 34% to $489 million. However, FDI in the banking sector increased by 71% to $323 million. In the first nine months of FY22, the oil and gas exploration sector attracted $180 million in FDI, up 5% from the same period last year.
“Most of the investments into the country’s power sector had been arriving under the first phase of China Pakistan Economic Corridor (CPEC),” the SBP explained the reason for the decrease of FDI in the power sector in the first quarterly report for FY22.