Foreign investors made a 20-month high investment of $271.1 million in Pakistan in June 2022, mostly in power, communication and financial sectors, setting aside all the doom and gloom about the economy and political situation by focusing on long-term business opportunities.
China remained the largest investor in Pakistan in June 2022, investing 92% more than in May 2022 and compared to $141.3 million invested in June 2021, the State Bank of Pakistan (SBP) reported on Thursday. China’s ongoing investments in power, telecom, and financial projects make it an all-weather friend of Pakistan.
With this, the cumulative foreign direct investment (FDI) amounted to $1.87 billion in the previous fiscal year 2021-22, which was 2.6% (or $43.7 million) higher compared to $1.82 billion in 2020-21.
China, the United States, Switzerland, the UAE, Hong Kong, the Netherlands and Singapore were the top investors during the year.
The oil and gas exploration, power, telecommunication and financial business sectors received the majority of investment during the year, according to central bank data.
“Despite the difficult global context, the latest investment figures are very encouraging. They testify to the country’s great potential,” said M Abdul Aleem, Secretary General of the Overseas Investors Chamber of Commerce and Industry (OICCI).
He stated that foreign investors had stayed true to their investment into Pakistan despite the trying environment globally and problems within Pakistan over the past year, including high commodity prices worldwide, a setback in the IMF loan program’s revival for Islamabad, the rupee’s drastic depreciation against the US dollar, a rise in the cost of doing business, high inflation, and a change in the Pakistani government.
Arif Habib Limited Head of Research Tahir Abbas noted that investors made a comparatively high investment during June due to their growing confidence that the IMF loan programme would be revived. Mr. Abbas added that the investors are watching to see if the new government starts fulfilling IMF’s prerequisite commitments one by one, which were long-time overdue.
Abbas noted that investors also made a higher investment in June, as it was the last month of the fiscal year in Pakistan. He explained that they opted to sum up the full-year investment targets in the month because they had made low investments in earlier months due to the occurrence of various issues.
Furthermore, China, US, Switzerland and UAE have cumulatively made 57% of the total investment during fiscal year 2021-22. Besides, the Power sector, financial business and oil and gas exploration sectors attracted cumulatively 60% of the total investment during the year, he told.
Country-wise FDI
China made the single largest investment of a net $532 million in Pakistan in FY22, followed by the United States which injected a net $250 million during the year.
Switzerland’s net investment of $146 million during the last fiscal year was eclipsed by the UAE’s net investment of $144 million. Hong Kong ($138 million), Singapore ($115 million), and the Netherlands ($104 million) were also significant investors during that time period.
Sector-wise FDI
The power sector attracted the single largest foreign investment worth $738 million during FY22, followed by the financial business sector which received a net investment worth $405 million during the year. These numbers underscore the importance of these industries in our economy.
The oil and gas exploration sector won a net investment of $195 million, while the communication sector saw a net foreign investment of $119 million during the previous fiscal year ended June 30, 2022.
