Profits, dividends: Foreign firms repatriated $758 million
Difficult working conditions did not cause any major dip in transfer of assets.
KARACHI:
Foreign companies operating in Pakistan repatriated $758.3 million in profits and dividends to their home countries in 2010-11, which was 2.3 per cent lower than $775.6 million sent abroad in the previous year, shows data released by the State Bank of Pakistan (SBP) on Friday.
According to experts, power and gas shortages and bad law and order situation have not only affected local businesses, but have also undermined the capability of foreign investors. They said cost of production had increased because of rise in raw material prices and high benchmark interest rate of 14 per cent, which jacked up borrowing cost.
These companies also faced weak demand and low profits due to around 13 per cent inflation rate, which curtailed the purchasing power of consumers.
However, the experts said that around $2 billion foreign direct investment in 2009-10 did have its positive impact in the following year as well and that was the reason that despite difficult conditions there was no significant drop in repatriation of profits and dividends by foreign companies in 2010-11.
According to breakdown, the financial business sector repatriated the highest amount of $167.6 million, showing an increase of 57 per cent. The power sector sent home $105.4 million in profits and dividends, up 0.4 per cent, oil and gas companies repatriated $74.7 million, up 43 per cent and transport sector repatriated $70.8 million, up 260 per cent.
In a bid to attract foreign investment, the government has liberalised rules for investors, allowing 100 per cent ownership of business ventures as well as unrestricted repatriation of profits and dividends. However, energy shortages and law and order problems have discouraged companies from making heavy investments.
In the last fiscal year ended June 30, 2011, foreign direct investment fell 27 per cent to $1.57 billion compared to $2.15 billion in the previous year, according to State Bank data released last week.
Published in The Express Tribune, July 23rd, 2011.
Foreign companies operating in Pakistan repatriated $758.3 million in profits and dividends to their home countries in 2010-11, which was 2.3 per cent lower than $775.6 million sent abroad in the previous year, shows data released by the State Bank of Pakistan (SBP) on Friday.
According to experts, power and gas shortages and bad law and order situation have not only affected local businesses, but have also undermined the capability of foreign investors. They said cost of production had increased because of rise in raw material prices and high benchmark interest rate of 14 per cent, which jacked up borrowing cost.
These companies also faced weak demand and low profits due to around 13 per cent inflation rate, which curtailed the purchasing power of consumers.
However, the experts said that around $2 billion foreign direct investment in 2009-10 did have its positive impact in the following year as well and that was the reason that despite difficult conditions there was no significant drop in repatriation of profits and dividends by foreign companies in 2010-11.
According to breakdown, the financial business sector repatriated the highest amount of $167.6 million, showing an increase of 57 per cent. The power sector sent home $105.4 million in profits and dividends, up 0.4 per cent, oil and gas companies repatriated $74.7 million, up 43 per cent and transport sector repatriated $70.8 million, up 260 per cent.
In a bid to attract foreign investment, the government has liberalised rules for investors, allowing 100 per cent ownership of business ventures as well as unrestricted repatriation of profits and dividends. However, energy shortages and law and order problems have discouraged companies from making heavy investments.
In the last fiscal year ended June 30, 2011, foreign direct investment fell 27 per cent to $1.57 billion compared to $2.15 billion in the previous year, according to State Bank data released last week.
Published in The Express Tribune, July 23rd, 2011.