11MFY14: Repatriation of profit stands at $1.1b, data shows

Amount 14.5% higher than corresponding period of previous year.


Our Correspondent June 27, 2014

KARACHI:


Total repatriation of profits on foreign investments amounted to $1.1 billion in the first 11 months of 2013-14, up 14.5% from the corresponding period of the preceding fiscal year, according to data released by the State Bank of Pakistan (SBP).


In May alone, the repatriation of profit from companies operating in Pakistan to their stakeholders based in foreign countries amounted to $171.7 million, up 5.4% from the repatriation of $162.9 million recorded in May 2013.

It should be noted that foreign direct investment (FDI) that the country received in the first 11 months of 2013-14 exceeds the amount repatriated as profits/dividends in the same period. FDI amounted to $1.3 billion in July-May, which is 17.7% higher than the profits repatriated during the same period.



Net FDI during May was $610.9 million as opposed to the profit repatriation of $171.7 million in the same month. The reason for exceptionally high FDI in May was the receipt of the proceeds of the spectrum auction.

A major chunk of total repatriation came from the payment of profit on FDI as opposed to foreign portfolio investment (FPI). Out of the total repatriation of $1.1 billion, profits on FDI constituted about 83.6%, or $967.6 million, during the 11-month period.

In order to encourage investment in the country, Pakistan allows 100% foreign ownership of businesses and unrestricted repatriation of profits.

The repatriated profits of the thermal power sector in July-May were $143.7 million, up 83.3% from the corresponding figure recorded in the comparable period of the last fiscal year. Similarly, the oil and gas exploration sector repatriated a total of $98.3 million in July-May, which was 158.6% higher than the corresponding 11-month period of 2012-13.

Other sectors that recorded substantial repatriations in the 11-month period were petroleum refining ($69 million), food ($93.8 million), chemicals ($45.9 million), pharmaceuticals ($35.5 million), telecommunications ($39.1 million) and cement ($39.6 million).

However, financial businesses repatriated the largest amount to their stakeholders in foreign countries in the first 11 months of 2013-14. With the payment of $327.6 million profits in July-May, the year-on-year increase in the repatriated amount for financial businesses remained 5.4%.

The increase in the repatriation of profits can be in the form of either dividends or liquidation of foreign holding.

According to analysts, the higher level of profit repatriation in the financial sector should be attributed to the dilution of foreign holding in a few banking-sector companies.

For example, a major foreign fund liquated its substantial stake from Faysal Bank in the first half of 2013-14, which substantially increased the overall repatriation level in the first 11 months of the current fiscal year.

Published in The Express Tribune, June 28th, 2014.

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COMMENTS (1)

usman786 | 9 years ago | Reply

it will inc how much after PPL and UBL

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