Pakistan’s reputation as a fast emerging investment destination received a boost when a World Bank report cited the country to be among the top five in the world to have received the most private infrastructure investment in 2017. Pakistan saw an investment inflow of $5.9 billion last year, becoming the leading South Asian country to have received such a huge amount for infrastructure projects.
The other countries making up the top five include China – which received $17.5 billion across 73 projects – Indonesia ($15.4 billion across 11 projects), Mexico ($8.6 billion across 20 projects) and Brazil ($7.3 billion across 24 projects). Pakistan’s $5.9 billion infrastructure investment was divided across four projects.
The World Bank report states that the top five countries attracted $54.5 billion, which was 58 percent of global investments in 2017. The report goes on to state: “Fifty-two countries received private participation infrastructure (PPI) investments in 2017, which was a significant increase over the 2016 level of 37 countries, and the past five-year average of 41 countries.”
The interesting thing to note about Pakistan’s achievement is that the investment level the country attracted even outpaced that of India, which received $4.8 billion during the year. This is the first time that Pakistan’s investment level has exceeded India’s, an indicator of the increased global confidence in the country’s economic viability, and the positive impact that the China-Pakistan Economic Corridor has had on the investment climate.
Rise of South Asia
The World Bank report further revealed that South Asia attracted $11.7 billion in investments in 2017, which was 90 percent higher than the 2016 level. The main driver behind this vastly improved showing in South Asia was Pakistan, whose investment level in 2016 was just $1.7 billion, before witnessing a phenomenal rise to reach the $5.9 billion figure in 2017. On the other hand, India’s investment levels witnessed only a slight increase, rising from $4.3 billion in 2016 to $4.8 billion last year.
The year 2017 also turned out to be a significant year for other countries in South Asia, namely Sri Lanka and Afghanistan, which received one investment project each, the first time this has happened since 2012.
Other notable developments
Among other important developments over the last year, the energy sector has overtaken other sectors in attracting private sector investment, with $51.9 billion invested in 203 projects, accounting for 56 percent of total PPI. This reflects an 11 percent rise over the previous year’s investment figure of of $46.8 billion.
Next comes the transport sector, which accounted for $36.5 billion in investments in 2017, making up 39 percent of the PPI share. The 66 transport projects had an average size $552.3 million, which was double the investment in the energy sector. Added together, the transport and energy sectors comprised 95 percent of the cumulative PPI investments.
Among other important sectors, the information and communication technology sector received only $3 billion across five projects, followed by the water and sewerage sector, with only $1.9 billion across 30 projects. Electricity generation projects were dominated by renewables as 173 out of 197 (88 percent) projects in this category were based on one of wind, solar, biomass, waste, geothermal, and hydropower.
Given the competitive nature of the global investment climate, Pakistan being ranked among the top five countries to have received the most PPI investments is highly encouraging for its future economic growth. Last year as well, the World Bank’s PPI Database had put Pakistan among the top five countries receiving the most infrastructure investment for the first half of 2017. The fact that Pakistan was able to maintain its position among the top five till the end of the year is a sign of the country’s economic resilience, and augurs well for its future prosperity.