Pakistan finds favor as an FDI destination
“FDI to Pakistan also rose significantly (82% to an estimated US$1.6 billion) as a result of rising Chinese investment in infrastructure,” according to a United Nations Conference on Trade and Development (UNCTAD) report.
Pakistan FDI from China increased by a whopping 132.6%
Data obtained from the Board of Investment in Pakistan (refer table above) suggests a 50% rise in year-on-year total FDI inflows into Pakistan for the fiscal year 2015-2016 (from $851.2 million to $1,281.1 million). Aggregate Pakistan FDI inflows for the first half of fiscal 2016-2017 have already amounted to $1,161.5 million (July 2016 to January 2017). 20.5% of this FDI inflow is from China alone. FDI from China into Pakistan increased by a whopping 132.6% from fiscal 2014-15 to fiscal 2015-16.
Power sector FDI leads, followed by construction; courtesy CPEC
From a sector perspective, the power sector has been outshining all other sectors. The sector has been the recipient of a spectacular 181% rise in year-on-year total FDI inflows for the fiscal year 2015-2016 (from $201.7 million to $566.6 million). Moreover, the power sector is already leading the aggregate sectoral FDI inflows into Pakistan with a good $245.3 million in inflows recorded for the first half of fiscal 2016-2017 (July 2016 to January 2017), followed by the construction sector which had received $119.6 million during the period. 21.1% of this FDI inflow is towards the power sector alone. FDI towards construction and power together account for a good 31.4% of the total FDI inflows for half year fiscal 2016-17.
Projects being undertaken under the China-Pakistan Economic Corridor (CPEC) have definitely led to this increased FDI flow from China to Pakistan. Chinese companies such as China Machinery Engineering Corporation (HKG: 1829), Power Construction Corporation of China (SHA: 601669), Zonergy, Shanghai Electric (HKG: 2727), and China Power International Development (HKG: 2380) are actively involved in energy projects along the China-Pakistan Economic Corridor region.