Total repatriation of profits on foreign investments amounted to $235.5 million in the first quarter of 2014-15, up 16.7% from the corresponding three-month period of the preceding fiscal year, according to the latest data released by the State Bank of Pakistan (SBP).
In September alone, repatriations on foreign investment amounted to $118.9 million, which was up by 110.8% from the preceding month of the current fiscal year.
In 2013-14, the repatriation of profit from companies operating in Pakistan to their stakeholders based in foreign countries 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 $169.5 billion during the first three months of 2014-15, which equals 71.9% of the funds that foreign companies repatriated as profits/dividends over the same period.
Net foreign direct investment (FDI) in September remained $82.4 million, which is 69.3% of the profit repatriation amounting to $118.9 million during the same month.
Net FDI in 2013-14 was $1.6 billion as opposed to the profit repatriation of $1.2 billion in the same year. The reason for exceptionally high FDI in the last fiscal year was the receipt of the proceeds of the spectrum auction in May.
A major portion of total repatriation recorded in July-September came from the payment of profit on FDI as opposed to foreign portfolio investment (FPI). Out of the total repatriation of $235.5 million, profits on FDI constituted about 88.6%, or $208.7 million, during the first three months of the current 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.
Financial businesses repatriated the largest amount to their stakeholders in foreign countries in the first quarter of 2014-15. With the payment of $61.9 million profits in July-September, the year-on-year increase in the repatriated amount for financial businesses remained 28.1%.
The repatriated profits of the oil and gas exploration sector in July-September were $50.7 million, up a massive 302% from the comparable period of 2013-14 when they totalled $12.6 million.
The thermal sector’s share in the repatriated profits in July-September was $26.5 million, down 54.2% from the corresponding figure recorded at the end of the comparable period of 2013-14.
Other sectors that recorded relatively substantial repatriations in July-September were petro-chemicals ($13.6 million), cement ($11.2 million), transport equipment ($9.4 million), transport ($18 million) and communications ($14.2 million).
Published in The Express Tribune, October 28th, 2014.
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Pakistan received direct investment from sources based in foreign countries amounting to $169.5 billion during the first three months of 2014-15, which equals 71.9% of the funds that foreign companies repatriated as profits/dividends over the same period.
$169 billion of direct investment in Pakistan would have resolved all our exchange rate issues.