KARACHI: Outflows of profit and dividends on foreign investment from the country rose 1.09 percent to $138.2 million in the first month of the current fiscal year, data released by the central bank showed on Tuesday.
Analysts said July’s figures showed a steady trend in the repatriating earnings. However, profit repatriation by foreign companies could face slowdown this year due to economic downturn, drop in corporate profitability and the weakness of the rupee against the dollar.
“Except banking and the fertiliser sectors, all sectors posted losses in the first half and second quarter of 2019, showing most multinational firms failed to notch up big payouts and dividends. So, they didn’t repatriate significant cash to their headquarters overseas,” an analyst said.
Firms repatriated dividends following the end of the earnings season. The SBP’s data showed the payments on foreign direct investment (FDI) increased to $126.8 million in July from $124.2 million in the same month last year. The payments on portfolio investment amounted to $11.4 million, compared with $12.6 million last year.
The SBP’s figures also revealed more repatriation in oil and gas exploration; followed by transport and financial business. Energy firms repatriated $29.8 million in July; however, these companies didn’t remit a single amount [profit] to their headquarters abroad in July 2018.
The transport companies repatriated $28.1 million, compared with $6 million last year. Profit outflows from the financial business stood at $26.9 million in July FY20, compared with $6.8 million in the corresponding period of the last fiscal year, the data showed.
A country-wise break up on repatriation of profit / dividend revealed Hong Kong firms repatriated the highest $42.9 million, compared with $0.7 million last year. Repatriated profits of
the Swiss firms rose to $11.2 million from $0.9 million.
Analysts said the government needs to increase FDI to ease further pressure on the balance of payments. Foreign direct investment inflows dipped 59 percent to $73.4 million during the first month of the current fiscal year.