These are some of the lines on which FDI into Pakistan is rising, and going into very productive and high-dividend sectors. This is amply indicated in the FDI inflows analysis undertakes by the State Bank of Pakistan (SBP), the central bank, for the just ended fiscal year 2015-16.
CPEC is a road to success and Chinese private sector investment in Pakistan is closely related to the $46 billion China Pakistan Economic Corridor (CPEC), and its three-year early harvest program which commenced in 2015-16, UAE is increasingly coming in to benefit from Pakistan as their key investment and export base to feed the global market. UAE and other investors also have an eye open to the big market as the upcoming Pakistani production and export base will feed in the overall context of CPEC.
The CPEC will link Middle East, Africa and UAE in the south-west, Central Asia and EU in the north, and China in the East of Pakistan – a huge zone lying between Asian and EU. It will be a 21st and 22nd century economic miracle, economists, futurologist and analysts say.
On the below mentioned projects construction work is on, in several parts of the CPEC within the Chinese territory, and in Pakistan itself. Look at the ongoing huge construction work at the brand new Gwadar port and its industrial city, only a few kilometers from the booming UAE and across the Straits of Hormuz. This, itself is widening up the UAE investors to put in their cash into Pakistan’s portfolio investment, and other projects.The teams are working in constructing a range of projects from power generation to processing of farm products.
SBP data latest data indicated that the FDI inflows in 2015-16 rose 39 per cent to total $1.281 billion, up from $923 million in 2014-15. The volume should be appreciated in the context of the fact that 2015-16 saw Pakistani Armed Forces defeating the Taliban and other foreign and domestic terrorist groups, bringing peace and insuring safety to the economy. At the same time, Prime Minister Nawaz Sharif’s pro-investment and business policies helped generate more electric power and supplied larger quantity of natural gas, including LNG imported from Qatar, to help the industry in boosting the production. It nearly ended the power outages which had hit the industrial output. These factors brought back to Pakistan new investors, with a firmer confidence in its economy.
On the top of the names of investors is China, under the umbrella of CPEC. The Chinese investment rose to $594 million in 2015-16, more than double as compared to $257 million in same period in previous fiscal year. Norway figured at No 2 with $172 million.
The UAE undertook investment of $164 million followed by Hong Kong and Italy, which provided $131 million and $103.5, respectively. The United States investment, which was $208 million in 2014-15, turned into minus because of its investment outflow of $65 million. The SBP also reports that 2015-16 saw a net outflow of portfolio investment of $319.7 million.
The foreign investors were keen on highly productive investment into power sector which attracted $566.6 million, up from $219 million in 2014-15. All indications are that for the next few years power sector will be the most attractive sector for FDI investment as demand rises rapidly. A large number of Chinese investors have gone into power generation in the last two years.
Investment in oil exploration was somewhat down to $261 million compared to $ 299 million in 2014-15. It was yet another sector, which recorded a continued disinvestment. It was $14.7 million while its disinvestment in 2014-15 was $20 million.
Finance Minister Ishaq Dar said recently that Pakistan’s overall domestic and foreign investment ratio to GDP has increased from 12.6 per cent to 15.6 per cent, which will further increase to 21 per cent.
Pakistan and international foreign investors from UAE, Saudi Arabia, Malaysia, Singapore, China, EU, UK and US are now evaluating various projects for investment in the country. Besides this, major foreign trade groups are negotiating business deals with their Pakistani counterparts.
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