Power sector FDI’s primary beneficiary in 1HFY24

Pakistan has witnessed a substantial 35% increase in foreign direct investment (FDI) during the first half of the current fiscal year, reports WealthPK quoting a recent report from the State Bank of Pakistan (SBP).

The power sector emerged as the primary beneficiary, attracting significant inflows, and contributing to the surge in FDI, Dr. Shahid, an economic researcher at the Ministry of Planning, Development and Special Initiatives, told WealthPK.

He said a net FDI of $862.6 million was received from July to December FY24, marking an impressive increase from $640 million during the same period of the previous year — an increase of $222.6 million.

“Notably, FDI inflows experienced a staggering six-fold increase in December 2023, soaring to $211.1 million compared to a mere $33.1 million in December of the preceding year,” he added.

“Despite a slight dip in the overall FDI inflows during the first half of the fiscal year, a total of $1,209 million compared to $1,217 million in the corresponding period last year, the healthy performance in December significantly contributed to the 35% growth.”

He pointed out that the power sector continued to be a major attraction for foreign investors, securing $433.5 million in the first half of FY24, slightly down from $439.4 million in the same period last year. This signals that despite grappling with growing circular debts, Pakistan remains an appealing destination for investment in the power sector.

“Oil and gas exploration experienced a substantial surge, attracting $129.8 million in 1HFY24 compared to $70.6 million in the corresponding period of the previous year.

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

China maintained its position as the top investor, contributing $292.8 million, albeit a slight decline from the previous year's $333.1 million. 

Inflows from the UK and the US amounted to $120.7 million and $127.9 million, respectively, while the Netherlands made a significant contribution of $69.4 million. Conversely, the largest disinvestment was observed from Norway, with an outflow of $110 million.

Dr Shahid said despite a 35% surge in FDI, the total amount remained below $1 billion in the first half of this fiscal year.

It is noteworthy that Pakistan has consistently received the lowest amount of FDI compared to other regional countries (except Afghanistan) for several years. The current boost, especially in the power sector, is a positive signal for Pakistan's economic outlook, showcasing its resilience and attractiveness to foreign investors.

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