Home / Business News / December 2016: Backed by Engro transaction, FDI up massive 328%

December 2016: Backed by Engro transaction, FDI up massive 328%

KARACHI: After remaining subdued for five successive months, the foreign direct investment (FDI) in Pakistan turned positive year-on-year in December 2016 with inflows of $595 million, up 328% from $139 million in the same month of the previous year, according to data released by the State Bank of Pakistan (SBP) on Monday.

However, the majority portion of the December increase was due to a one-off investment transaction conducted by a Dutch company for the acquisition of Engro Foods.

Pakistan has recorded low levels of foreign investment in recent years. Many foreign investors have pulled out because of security threats, persistent energy crisis and poor governance.

The massive jump in December reading came in the wake of the company acquisition valuing $462 million by the Netherlands-based Friesland Campina in December 2016. This took the Netherlands on top of the list of countries with the highest FDI in Pakistan.

Overall, FDI inflows from the Netherlands touched $464 million in the first six months (Jul-Dec) of the current fiscal year 2016-17 compared to just $9.2 million in the same period of last year.

Higher inflows in December 2016 also took the cumulative FDI numbers for Jul-Dec to $1.08 billion, up 10.4% compared to $979 million in the same period of previous year.

China came at the second place with total FDI inflows of $211 million in the first six months, down 53% compared to $453 million in the same period of last year.

Turkey was at number three as it brought investments of $129 million in the six months of 2016-17 compared to just $8 million in the corresponding period of last year.

Winners

The biggest jump in FDI was recorded in the food sector that attracted $467 million in the first six months as opposed to outflow of $30-million investments in the corresponding period of previous year.

In July 2016, the Netherlands-based dairy company bought 51% shares in Engro Foods at an estimated $448 million, the single largest private-sector FDI in Pakistan in recent years.

The second highest jump was in the electronics sector where the country received $134 million in Jul-Dec 2016-17, up 347% compared to $30 million in the same period of last year.

The sector remained in the limelight in 2016 because of Turkish investment in a major electronics company in Pakistan.

Losers

The power sector attracted $211 million in the first six months, down 54% compared to $457 million in the same period of last year.

Similarly, oil and gas exploration received an investment of $86 million in Jul-Dec 2016-17, down 43% from $151 million in the same period of previous year.

FDI, which is a vital driver of a country’s economy, has dropped significantly in Pakistan since 2008 mainly because of political uncertainty, security issues and energy shortages.

Pakistan received $5.4 billion in fiscal year 2008, which was the highest FDI in the country’s history, according to the Board of Investment (BoI).

courtesy : Express Tribune

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