Repatriation of profits on foreign investment down 37pc

KARACHI: Outflow of profits and dividends on foreign investments from the country fell 37 percent to $759.5 million in the first six months of 2018/19 fiscal year, figures published from the State Bank of Pakistan showed on Monday.

The country paid $90.5 million as profits and dividend in December, compared with $171.9 million in the previous month.

The decline in the profits and dividends from the foreign firms is driven by slowdown in their corporate earnings. However, it is a healthy sign for the country’s current account deficit.

The decrease in profit repatriation by the foreign companies could provide some relief to the current account balance, improving the country’s ability to make payments on its foreign debt obligations.

The payments on foreign direct investments (FDI) went down to $628.8 million in July-December FY19 from $1.05 billion a year earlier.

The payments on foreign portfolio investments were $130.7 million. That compared with $146.6 million in the same period last year.

The persistent slowdown in Chinese investment, increasing cost of doing business and economic uncertainty led a decline in the FDI during the period under review.

FDI plunged 19.2 percent to $1.319 billion during the first half of the current fiscal year.

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

The power sector repatriated $70.6 million worth of profits, whereas it had repatriated a much higher profit of $141.4 million last year.

Profit outflows from the financial businesses stood at $113.2 million, compared with $175.7 million in the first half of FY18.

Outflow of profits from telecommunications amounted to $33.8 million during July-December. The outflows were $166.6 million in the corresponding period last year.

Energy firms repatriated $79.2 million, compared with 130.1 million in the same period last year.

A country-wise break up on repatriation of profit/dividend revealed that Chinese firms repatriated $39.8 million abroad during July-December FY19, compared with $81.6 million a year ago.

Swiss businesses transferred $58.4 million to their headquarters in July-December against $131.8 million last year. Repatriated profits of the UK firms fell to $171.9 million from $260 million a year earlier. [the_ad id=”31605″]

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