Multinationals repatriate $859.6m in July-January

Flight of profits from companies operating in Pakistan rises 41.5%.

Total repatriation of profits on foreign investments amounted to $859.6 million in the first seven months of 2014-15, according to data released by the State Bank of Pakistan (SBP) on Thursday.

The repatriation of profits from companies operating in Pakistan to their stakeholders based in foreign countries increased 41.5% in July-January on a year-on-year basis, as they amounted to $607.4 million in the same period of preceding fiscal year.

Pakistan allows 100% foreign ownership of businesses and unrestricted repatriation of profits to encourage investment in the country. The repatriation of profits can be in the form of either dividends or liquidation of foreign holding.

In January alone, repatriations on foreign investment amounted to $68.8 million.



In 2013-14, profit repatriation amounted to $1.2 billion, up 12.6% from the repatriation of a little over $1 billion recorded in 2012-13. Pakistan received direct investment from sources based in foreign countries amounting to $545.4 million in the first seven months of 2014-15. This equals 63.4% of the funds that foreign companies repatriated as profits/dividends over the same period.

Net foreign direct investment (FDI) in January remained $16.3 million, which is 23.7% of the profit repatriation during the same month.

Net FDI in 2013-14 was $1.6 billion, which is $0.4 billion less than the profit repatriation recorded in the same year.

A major portion of total repatriation recorded in July-January came from the payment of profit on FDI as opposed to foreign portfolio investment (FPI). Out of the total repatriation of $859.6 million, profits on FDI constituted about 82.2%, or $706.9 million, during the first seven months of the current fiscal year.

Financial businesses repatriated the largest amount to their stakeholders in foreign countries in July-January. With the payment of $160.3 million profits, the year-on-year change in the repatriated amount for financial businesses was almost flat.

The repatriated profits of the telecommunication sector were $158.2 million, up more than seven times compared with the similar period of the preceding fiscal year. Repatriations from the oil and gas exploration sector were $74.9 million, up 27.3% from the comparable period of 2013-14, when they totalled $58.8 million.

The thermal sector’s share in the repatriated profits in July-January was $70.8 million, down 21.5% from the corresponding figure in the comparable period of 2013-14.

Other sectors that recorded relatively substantial repatriations were food ($70.3 million), petroleum refining ($53.8 million) and cement ($44.7 million).

Published in The Express Tribune, February 27^th, 2015.

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