Key Points
- Foreign direct investment rises 24 per cent year-on-year to $495 million
- August FDI jumps 80 per cent to $316 million
- China remains the largest source, with investment rising to $176 million
ISLAMABAD: Pakistan’s net foreign direct investment (FDI) rose 24 per cent year-on-year to $495 million in the first two months of fiscal year 2026-27, according to State Bank of Pakistan data.
FDI reached $316 million in August, up 80 per cent from $175 million a year earlier and 77 per cent from $179 million in July.
Power and financial businesses recorded the highest FDI inflows in August, while China, Canada and the United Arab Emirates were the major net contributors, according to Topline Securities.
Financial services attracted $147 million in FDI in July-August, compared with $113 million in the same period a year earlier. The power sector received $145 million, down from $157 million a year earlier.
China remained the largest source of FDI, with Chinese firms investing $176 million during the first two months, up from $121 million a year earlier. Investment from the UAE also increased to $58 million from $35 million.
Pakistan’s investment scenario improves
The overall foreign investment picture also improved during the period. Total foreign investment reached $562 million in July-August, compared with $312 million a year earlier.
Foreign private investment rose to $493 million from $324 million, while portfolio investment outflows fell sharply to $1.7 million from $74.8 million.
Foreign public investment also turned positive, recording an inflow of $69.4 million compared with an outflow of $11.8 million a year earlier.
The increase reinforces Pakistan’s efforts to attract foreign capital to support economic growth and investment in key sectors. The government has highlighted fiscal consolidation, structural reforms, privatisation and measures to improve the business environment as part of efforts to attract international investors.
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China has remained a major source of investment for Pakistan over the longer term.
Finance Division data show China was also Pakistan’s largest FDI contributor during FY2025-26, followed by Hong Kong, the United Kingdom and Switzerland.
The latest figures therefore show an improvement not only in direct investment but also in Pakistan’s broader foreign investment position at the beginning of FY27.
Pakistan’s overall investment environment has indicated signs of improvement after a period of tight financial conditions, economic uncertainty and subdued private-sector activity.
The government has been striving to increase investment by improving macroeconomic stability, streamlining regulatory procedures, and encouraging public-private partnerships.
The Pakistan Economic Survey 2025-26 said net FDI stood at $1.4 billion during July-March FY2026, compared with $1.9 billion a year earlier.
It noted that the decline was largely due to a one-off telecommunications transaction, while underlying inflows remained concentrated in energy, financial services and other long-term sectors.
The survey also identified continued reforms, investment facilitation through the Special Investment Facilitation Council (SIFC) and improving macroeconomic stability as factors expected to support higher FDI over the medium term.
The SIFC, constituted in 2023, has positioned itself as a single-window platform to coordinate federal and provincial authorities and facilitate investment in sectors including agriculture, minerals, information technology, energy, infrastructure and logistics.
Its mandate includes reducing procedural delays, improving coordination among government institutions and developing an enabling policy environment for investors.
SIFC remained instrumental in expediting individual investment projects. In April, it said it facilitated seven cement plants involving estimated investment of about $700 million by removing regulatory hurdles.
The council has also done well on investment pipelines and projects in petroleum, transport infrastructure, tourism, livestock, automobiles and technology.
The council has focused on resolving business and regulatory issues through direct engagement with the private sector.
Business groups have credited the SIFC platform with helping address operational constraints and strengthening investor confidence, while the government has stressed the need for a stable and predictable policy framework.
