Cement and construction sectors struggle despite net FDI growth

The State Bank of Pakistan (SBP) has released foreign direct investment (FDI) data for February 2020 and eight months of the current financial year 2019-20. It showed that the country received US$2.24bn against US$2.36bn in the corresponding July-February period of the last fiscal year of 2018-19.

In February 2020 FDI inflows amounted to US$332.5m compared to US$179.1m in the corresponding month a year earlier.

However, in July-February, net FDI amounted to US$1.85bn, up 75 per cent from US$1.06bn in the corresponding period of the last fiscal year.

China transferred the highest FDI of US$779.9m in the period under review, compared with US$870.7m in the corresponding period a year earlier. Norway followed with inflows of US$318m, Hong Kong (US$113m), UAE (US$107m) and UK (US$131m).

However, the increasing FDI trend is yet to reflect in the country’s construction and cement industries, which still lag behind other industries.

Pakistan’s cement and construction sectors recorded a drop in net FDI of 88.9 per cent to US$36.4m in the 8MFY19-20, compared to US$327.4m in the corresponding period of last year. Of this total, the cement industry attracted an investment of US$25.8m and the construction sector US$10.6m, compared to US$32.4m and US$295m, respectively in year-ago period. This represents a decline of 20.4 per cent and 96.4 per cent in the cement and construction sectors, respectively. In February 2020 alone, both sectors attracted a total net FDI of only US$4m.