FDI Records a Huge Increase in May 2021

The foreign direct investment (FDI) in different sectors of Pakistan increased to a seven-month high at $198.3 million in May 2021. This is 63 percent higher than the $121 million inflows recorded in May 2020. Inflows for May 2021 were also higher on a monthly comparison, up 25 percent as compared to $158.4 million inflows in April 2021, SBP data showed Overall, the Foreign Direct Investment (FDI) stood at $1.75 billion in the real sector from July to May FY21, which is less than 27.7 percent from the $2.42 billion recorded last year. The FDI inflows were slightly lower than last year, and the main drop in net FDI was due to a sharp increase in outflows during the period. During the period under review, FDI inflows were $2.769 billion, down 10 percent, as against outflow of $1.01 billion, which rose 49 percent. Greenfield investments were impacted, mainly due to the uncertainty about the global trajectory of COVID-19 cases, the risk of lockdowns, the scale and efficacy of the governments’ Covid-related support, and the rollout of the vaccination programs. Moreover, multinational corporations (MNCs) also reduced their new equity investments. China made a leading share in investment with $728 million. It is followed by Norway and United Kingdom with $147 million and $130 million. The major sector received FDI were power sector, financial businesses, and oil and gas exploration and production. The overall foreign investment, including FPI and FDI, stood at $3.95 billion by the end of 11 months of FY21. The investment might cross the mark of $4 billion in the next month. The inflow of investment has surged to nearly $4 billion in the current financial year 2020-21. This is being attributed to the Green Eurobonds, which attracted a handsome amount of $2.5 billion under the head of foreign portfolio investment (FPI). ALSO READ Telecom Sector Invested Over $465 Million In FY21: Economic Survey According to the statistics updated by the State Bank of Pakistan (SBP), the overall FPI during the period of July to May 2020-21 stood at $2.45 billion, after an amount of $5.2 million outflows were recorded in the said period. This shows an overall growth of 949 percent year-on-year. The country raised the first Green Eurobond last month for 5 years, 10 years, and 30 years, at attractive rates varying from 6 percent to 8.8 percent, which received an overwhelming response from foreign investors. ALSO READ Govt Raises Rs. 1.096 Trillion Through T-Bill Auction The bonds were oversubscribed subscribed, but the investment is a sort of borrowing, which has limited gains compared with the investment in various sectors.