Profit repatriation stands at $891m

KARACHI:

Multinational companies (MNCs) based in the United Kingdom and United States reported the largest profit repatriations from Pakistan to their home countries during the first half of current fiscal year.

Companies from the UK repatriated around $170.3 million while US-based firms sent around $146.7 million back to their home countries during the period under review.

A majority of these companies were operating in financial, fast moving consumer goods (FMCGs), pharmaceutical, food and beverages, oil and gas marketing, petroleum refineries, technology, chemical and ceramics sectors, the central bank data suggested.

Foreign companies in the financial sector repatriated the largest profit of $163.3 million to their headquarters during July-December 2021-22, which was 22% higher compared to $133.5 million dispatched in the same period of previous year.

Leading banks offering services in Pakistan have notable foreign shareholdings from the UK and US.

“Several banks have announced dividends twice during the period under review as compared to the one-time dividend announcement in the same period of previous year,” Arif Habib Limited Head of Research Tahir Abbas said while talking to The Express Tribune.

In 2020, the central bank directed the commercial banks to stop the payment of dividends in order to avoid any financial crisis during the peak of Covid-19 pandemic, he recalled.

There was no such restriction on banks in 2021, he underlined.

However, the cumulative profit sent home by companies based in the UK and US during the period under review was low as compared to the repatriations in the same period of previous year.

Repatriations from UK-based companies stood at $318 million while US firms dispatched around $152.6 million to their countries in the same period of previous year.

Read UK, Pakistan tax authorities at odds

They may have kept a portion of profit in the country with the objective of re-investing it instead of dispatching the entire amount, as foreign investors are now considering expanding their foothold in Pakistan compared to the depressed investment scenario during the peak of Covid-19 pandemic.

The State Bank of Pakistan (SBP) reported that the MNCs working in different sectors of the country cumulatively repatriated a sum of $891.2 million to their home countries during July-December FY22.

The repatriation was slightly lower during the period under review as compared to $892.3 million dispatched in the same period of the preceding year.

Other top companies that dispatched notable profits to their home countries in July-December FY22 were from Switzerland, the Netherlands, China, Malaysia, France and Singapore.

Power sector appeared as the second largest in terms of repatriation during the six-month period at $95.1 million as compared to $26 million in the same period of previous year.

Abbas revealed that the government had made a significant portion of due payments to independent power producers (IPPs) to clear the circular debt.

Moreover, a number of power projects - set up under the China-Pakistan Economic Corridor (CPEC) banner - have come on line.

“Both IPPs and CPEC projects have repatriated profits during the period under review,” he pointed out.

Surprisingly, the petroleum refinery sector, which has remained in crisis for the past three years, dispatched profits and dividend worth $28.2 million in July-December 2021, as compared to a mere $1.2 million repatriation in the same period of previous year, the data suggested.

Foreign companies working in other sectors including oil and gas exploration, transport, transport equipment (automobile), tobacco, food and beverages and chemical also dispatched notable profits.

However, the amount of profit dispatched in the period under review remained less as compared to the same period of previous year.

Published in The Express Tribune, January 29^th, 2022.

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