On a month-over-month basis, the FDI dropped by 78%. In June, it came to $271 million.
According to figures from the State Bank of Pakistan, foreign direct investment (FDI) into the banking sector was $27.7 million in the first month of this fiscal year, down from $36 million in the same month previous year.
The amount invested in the gas and exploration sector fell from $19 million to $2.7 million.
Additionally, direct investment in the communications industry decreased, from $14.9 billion to $10.6 billion.
However, compared to a year ago, the investment in the power industry increased to $30.6 million in July from $26.5 million.
Investments by Swiss companies jumped to $12 million from $11 million, and investment flows from the UAE increased to $13 million from $3 million. But Chinese FDI decreased from $3 million to $5 million.
The low levels of portfolio investment and FDI from the private sector are a major source of concern for the government, but analysts predict that the revival of the International Monetary Program, which is anticipated to happen later this month, will increase investor confidence in Pakistan’s economy.
According to the SBP’s half-yearly report for FY2022 on the status of Pakistan’s economy, which was released on August 12, global FDI inflows rebounded substantially in 2021 and exceeded pre-Covid levels, with around 75% of the increase being recorded in advanced economies.
According to the research, these nations’ significant fiscal and monetary stimulus, which included lower borrowing costs and appealing investment possibilities in infrastructure and digital services, led to a significant increase in FDI flows.
Contrarily, FDI to emerging markets expanded at a slower rate than it did to advanced countries, and FDI inside EMs was similarly widely distributed. As investors sought to capitalize on the rise in demand for digital services following the onset of the pandemic, sectoral data reveals that FDI into IT services firms increased dramatically, it was added.
However, FDI only increased by 3% to $1.868 billion in FY2022, the final fiscal year.
An increase in direct investment was aided by FDI into the IT and telecom sectors. ICT start-ups in Pakistan attracted foreign investment and their exports increased.
The US, Netherlands, and Singapore contributed the lion’s share of FDI to the IT and telecom industries. The US made investments in tech-related businesses, including cloud service providers; the Netherlands made large investments in one of the nation’s top mobile network service providers; and Singapore put money in a logistics platform that uses technology.
As a result of one of the largest telecom businesses in the nation being granted a 4G spectrum license, the telecom sector experienced higher FDI inflows. Additionally, the financial services sector saw an increase in FDI inflows, with funds going into microfinance organisations as well as a few established conventional banks for technological and digital advancements.
Thus, investment from China in coal ventures abroad (including in Pakistan) is diminishing, the SBP said.