HomeBusinessThe main recipient of FDI in the power sector in 1HFY24 IG...

The main recipient of FDI in the power sector in 1HFY24 IG News

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Pakistan witnessed a significant 35% increase in foreign direct investment (FDI) in the first half of the current fiscal year, according to WealthPK citing a recent report by the State Bank of Pakistan (SBP).

The energy sector has emerged as the main beneficiary, attracting significant inflows and contributing to the rise in FDI, Dr. Shahid, an economic researcher at the Ministry of Planning, Development and Special Initiatives.

He said they received net foreign direct investment of $862.6 million from July to December FY24, an impressive increase from $640 million in the same period last year – an increase of $222.6 million.

“Notably, foreign direct investment inflows rose a staggering six-fold to $211.1 million in December 2023, compared to just $33.1 million in December last year,” he added.

“Despite a slight decline in total FDI inflows in the first half of the fiscal year, totaling $1,209 million compared to $1,217 million in the same period last year, December’s healthy performance contributed significantly to the 35 percent growth.”

He pointed out that the energy sector continued to be a major draw for foreign investors, securing $433.5 million in the first half of 2014, down slightly from $439.4 million in the same period last year. This suggests that despite grappling with rising circular debts, Pakistan remains an attractive destination for investment in the energy sector.

“Oil and gas exploration saw a big increase, attracting $129.8 million in 1HFY24 compared to $70.6 million in the same period last year.

Meanwhile, the financial sector received $91.1 million, down from $127.3 million recorded in the previous year,” he continued.

China maintained its position as the largest investor, contributing $292.8 million, although this was a slight decline from $333.1 million the previous year.

Inflows from the United Kingdom and the United States were $120.7 million and $127.9 million respectively, with the Netherlands contributing a significant share at $69.4 million. In contrast, the largest disinvestment was recorded in Norway, with an outflow of $110 million.

Shahid said despite a 35 percent increase in foreign direct investment, the total remains below $1 billion in the first half of this fiscal year.

It is worth noting that Pakistan has consistently received the lowest amount of FDI compared to other regional countries (except Afghanistan) for many years. The current boost, particularly in the power sector, is a positive signal for Pakistan’s economic outlook, demonstrating its resilience and attractiveness to foreign investors.

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