Pakistan has seen an increase in FDI (Foreign Direct Investment) especially in the wake of the $57 billion CPEC project. FDI increased by 5% to $2.41 billion in fiscal year 2016-17 as compared to $2.30 billion in the previous year. The power sector was the biggest recipient of FDI with $795 million in Fiscal Year 2017.
China leads with a 49% share contributing $1.185b followed by Netherlands and Turkey who contributed $463m and $136m respectively. Main sectors for investment remain to be infrastructure, power and trade.
The question arises that despite a hike in foreign investment what is holding Pakistan to become a nation of trust for businesses and companies abroad? According to Sajid Amin, research fellow, head policy solutions lab, Sustainable Development Policy institute, FDI could be divided into two types; efficient and strategic. Efficient FDI depends on ease of doing business, tax structure and technically skilled workforce.
Strategic FDI is based on geographical and political interests. Pakistan, mostly is a recipient of strategic FDI which is not sensitive to market situation. Majority of the FDI coming to Pakistan is infrastructure based. Infrastructure in itself is a tool and mechanism and depends on human capital for furthering. Mr. Amin also stated, ‘Pakistan is way below the bare minimum threshold in terms of skilled workforce.