KARACHI: Total repatriation of profits on foreign investments amounted to $1.38 billion in the first 11 months of 2014-15, according to the latest data issued by the State Bank of Pakistan (SBP).
The repatriation of profits from companies operating in Pakistan to their stakeholders based in foreign countries increased 19.5% in July-May on a year-on-year basis, as they amounted to $1.15 billion in the same period of the 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 May alone, repatriations on foreign investment amounted to $192.2 million.
In 2013-14, profit repatriations 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 $803.2 million in the first 11 months of 2014-15. This equals only 58.1% of the funds that foreign companies repatriated as profits/dividends over the same period.
Net foreign direct investment (FDI) in May remained in the negative zone. As opposed to the net FDI outflow of $7 million last month, total repatriation of profits on foreign investments amounted to $192.2 million during the same 31-day period.
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-May came from the payment of profit on FDI as opposed to foreign portfolio investment (FPI). Out of the total repatriation of $1.38 billion, profits on FDI constituted about 81%, or $1.12 billion, during the first 11 months of the current fiscal year.
Financial businesses repatriated the largest amount to their stakeholders in foreign countries in July-May. With the payment of $325.1 million profits in July-May, the year-on-year change in the repatriated amount for financial businesses was almost flat.
The repatriated profits of telecommunication sector remained $177.5 million, up more than four and a half times compared with the similar period of the preceding fiscal year.
Repatriations from the oil and gas exploration sector in July-May were $118.5 million, up 20.5% from the comparable period of 2013-14 when they totalled $98.3 million.
The thermal sector’s share in the repatriated profits in July-May was $113.7 million, down 20.8% from the corresponding figure recorded at the end of the comparable period of 2013-14.
Other sectors that recorded relatively substantial repatriations in July-May were food ($112.7 million), cement ($66.4 million), petroleum refining ($65.2 million) and beverages ($60.5 million).
Published in The Express Tribune, June 30th, 2015.
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