Profit repatriation falls 26pc in FY2020

KARACHI: Foreign investors remitted $1.82 billion in profits and dividends from Pakistan during the last fiscal year of 2019/20, sharply down 26.3 percent year-over-year, as economic activities slowed to trickle, the central bank’s data showed on Monday.

Outflow of profits and dividends on foreign investments from the country amounted to $1.34 billion in the previous fiscal year. The decrease in profits and dividends was due to the slowdown in the profitability of the various companies operating in the country. The repatriated earnings sent by multinationals to their headquarters remained low due to the sluggish economic activity amid nearly two-month complete lockdown imposed in the country following the coronavirus outbreak.

Weakening of the rupee against the US dollar also caused the decline in repatriated earnings of multinational companies in July-June. The country paid $130.8 million as profits and dividends in June, compared with $20.2 million in the previous month, according to the SBP.

The payments on foreign direct investment stood at $1.20 billion in FY2020 compared with $1.57 billion a year earlier. The payments on foreign portfolio investment were $142.9 million. That compared with $247.7 million in FY2019.

The central bank’s data showed that some key sectors such as food, power, oil and gas exploration, telecommunications and financial businesses sent lower profits to their parent companies abroad.

Food sector repatriated $59.6 million in July-June FY2020, compared with $185.8 million in the previous year. The power sector repatriated $72.8 million worth of profits, whereas it repatriated $135.1 million profits in FY2019.

Repatriation of profits from telecommunications amounted to $132.3 million during FY2020. These outflows stood at $305 million in the previous year. Financial businesses repatriated $238.8 million profits in 12 months of the 2019/20 fiscal year, compared with $273.3 million a year ago.