ISLAMABAD: The government is developing a three-year rolling strategy to capitalize on the economic commonalities between Pakistan and China under CPEC.
According to an official brief of the government, a copy of which is available with WealthPK, within the framework of the three-year strategy, the role of the Board of Investment’s (BOI) is to attract efficiency-seeking foreign investments that will help in knowledge transfer and export promotion. The brief says the country-wise foreign direct investment (FDI) data confirms that China has the largest share of foreign investment in Pakistan; however, the FDI has decreased by 29.27% in the last two financial years due to multiple factors.
According to the official figures, the FDI inflow during July-June FY2022 was recorded at $706.3 million, while the outflow was $174.7million and net FDI was recorded at $531.6 million. The FDI inflow during July-June FY21 was calculated at $1,083 million, outflow $331.4 million and net FDI $751.6 million.
Data on the sector-wise Chinese investment in Pakistan showed that during FY2022, net FDI in the power sector totalled $541.27 million, while in the electrical machinery, construction, electronics, rubber and rubber products and storage facilities sectors, it was recorded at $28.21 million, $19.37 million, $10.62 million, $9.34 million and $3.87 million respectively.
In FY2021, net FDI in the power sector reached $605.72million, while in the electrical machinery, construction, electronics, rubber and rubber products and storage facilities sectors, it was recorded at $108.37 million, $18.28 million, $-2.75 million, $16.90 million and $0 million respectively.
The report further highlights that the decrease in Chinese investments during the last two financial years was due to various reasons, including but not limited to Covid-19 outbreak that caused a sharp decline in the global economic activity.
As the majority of Chinese investments fall within CPEC ambit, economic disruptions and social restrictions caused by Covid-19 also affected the pace of CPEC, thus impacting the overall net FDI.
The report says the decrease in Chinese investments in the last two years is mainly due to the conclusion of CPEC Phase-I, which has overall impacted the outlay of Chinese investments in Pakistan. Most of the early harvest projects under the first phase of CPEC related to power and infrastructure have been completed. –INP
