KARACHI: Companies have sent around 23 percent more profits and dividends to their foreign headquarters during the first ten months of the current fiscal year following improved economic and security situations in Pakistan that resulted in better profitability on their investments, an analyst said.
The State Bank of Pakistan (SBP) data showed on Thursday that repatriation of profit/dividend on foreign investment increased 22.76 percent to $1.45 billion in the July-April period of 2015/16. The tally was $1.186 billion in the corresponding period of the last fiscal year.
The SBP said major portion of the repatriation was seen against foreign direct investment, which recorded 18.34 percent increase to $1138 million in the period under review as compared to $962 million a year ago. The higher outflows were seen in sectors, including oil and gas, power, communication and financial business.
The State Bank’s data showed that repatriation from oil and gas sector amounted to $101.8 million, power sector ($155 million), communication ($164.6 million) and financial business ($233.5 million).
Analysts said heavy investments were seen by foreign participants in the exploration and production sector in the past. Foreign investors were repatriating profits now in the shape of profit and dividends.
They said better economic condition, including improvement in security situation, helped in confidence building of the investors.
The analysts said Pakistan has a liberal policy of repatriation of foreign investment, governed by the Foreign Exchange Regulation Act, 1947. Further, foreign investors in any sector, under the Investment Policy 2013, are allowed to repatriate profits, dividends or any other fund in the currency of the country from which the investment is originated.
The overall foreign direct investment posted a growth of 5.4 percent to $1.016 billion in July-April 2015/16 over the same period a year earlier.
Analysts attributed the significant increase to major activities under the China-Pakistan Economic Corridor projects.
Sector-wise analysis revealed that power sector was the major recipient of FDI during the period under review. The inflows of FDI towards the sector posted a sharp growth of 208 percent to $518 million.
The overall foreign private investment in the country fell 64.7 percent to $635 million in July-April. It was $1.8 billion in the corresponding period of the last fiscal year. FDI and portfolio investments are major components of the total foreign investment.
In July-April 2015/16, the portfolio investment outflows amounted to $381.2 million as compared to inflows of $836.8 million in the same period a year ago.
The capital market experts attributed the decline to global recessions and uncertainty in international oil prices.
The foreign public investment outflow stood at $19.6 million in the months under review as compared to inflows of $937 million a year earlier.
