International statistics showed that overall, foreign direct investment (FDI) to developing countries declined by 7 percent in 2023 to $867 billion, but the decline varied significantly across regions. While greenfield project announcements in developing countries grew by over 1,000, the distribution was uneven, with nearly half in South-East Asia and a quarter in West Asia. Experts registered that FDI inflows to Africa fell by 3 percent to $53 billion. Greenfield announcements included megaprojects like a green hydrogen project in Mauritania. International project finance declined by a quarter in deal numbers and by half in value. Flows to developing countries in Asia declined by 8 percent to $621 billion, with China, the world’s second-largest FDI recipient experiencing a rare fall. India and West and Central Asia also saw significant drops, while South-East Asia held steady.
FDI flows to Latin America and the Caribbean were declined by 1 percent to $193 billion. The number of greenfield investment announcements declined, but the value of greenfield projects rose because of large investments in commodity sectors, critical minerals and renewable energy. Meanwhile, FDI flows to structurally weak and vulnerable economies increased. Inflows to the least developed countries grew to $31 billion, or 2.4 percent of worldwide flows. Landlocked developing countries and small island developing states also saw increases. But in all three groups, FDI remains concentrated among a few countries. Moreover, Lacklustre financial flows to developing countries were not because of a lack of investment facilitation efforts. In 2023, 86 percent of the investment policy measures taken by developing countries were more favourable to investors. In contrast, 57 percent of measures in developed countries were less favourable, with restrictions, like FDI screening mechanisms increasingly used to address national security concerns. Globally, the experts also recorded that the number of investment policy initiatives in 2023 matched the five-year average, with about three quarters favorable to investors. Investment facilitation reached a record 30 percent of all initiatives. Incentives targeted the services sector and renewable energy in particular. In 2023, 29 new international investment agreements (IIAs) were concluded, less than half being traditional bilateral treaties. Reforming older IIAs remains slow, with about half of global FDI still governed by non-reformed treaties, increasing the risk of investor-State dispute settlement (ISDS) cases. This is higher for developing countries (two-thirds) and LDCs (three-quarters). Only 16 percent of global FDI stock is covered by new-generation IIAs. Statistics showed that the total ISDS case count reached 1,332, with 60 new arbitrations in 2023. About 70 percent of new cases were against developing countries, counting three LDCs, with claims mostly in the construction, manufacturing and extractive sectors. In Pakistan according to the State Bank of Pakistan (SBP) the FDI in Pakistan jumped 16.9 percent YoY to $1.9 billion in FY2024 as against to $1.63 billion received in the previous year.
Meanwhile, in June 2024 alone, FDI inflow jumped 37.8 percent YoY to $168.75 million as against to $122.42 million registered a year ago. Comparison on a month-over-month basis explains that the net inflow of FDI fell by 37.5 percent as against to an inflow of $269.87million in the last month. The biggest investor was China, with FDI from the country registered at $568 million during FY2024, accounting for 30 percent of the total FDI. However, this fact was down 18 percent as against to last year’s $693 million. The Biggest attraction for foreign investors during the year was the energy sector, with a net inflow of $800 million, down 11 percent from $898 million previous year. The Sector’s share stood at 42 percent of the total FDI. With respect to the portfolio investment under FDI, an inflow of $120.23 million was witnessed through equity securities in FY2024, as compared to an outflow of $16.12 million in the last year. The Foreign private investment, which includes both direct investments and portfolio investments registered an inflow of $2.02 billion in FY2024, compared to an inflow of $1.61 billion in FY2023. Meanwhile, foreign public investment outflow reached at $502.69 million during the year. Accordingly, the total foreign investment during FY2024 clocked in at $1.52 billion, as against to an investment of $600.75 million in FY2023. The Government of Pakistan was keen on introducing policy measures that would streamline investment processes and provide incentives to foreign investors.