Repatriation of profits soars to $650 million

Despite slackness in Pakistan's economy, repatriation of profit and dividend by foreign investors has been gradually increasing and here has been a surge of 7 percent during ten months of current fiscal year. The foreign investors repatriated $650 million aboard on account of profit and dividend in July-April period of fiscal year 2010-11 compared with $609 million of corresponding period of last fiscal year, depicting an increase of $41 million.
On the other side, there has been a decline of 28 percent or $492 million in foreign direct investment (FDI) during this period as the country attracted $1.232 billion FDI in first ten months of current fiscal year as against $1.724 billion in the same period of last fiscal year. Economists said that repatriation of profit was on decline during initial months of the current fiscal year as slow economic activity hit the profitability of companies. However, now repatriation of profit and dividend is again on surge, which reflects that foreign investors are earning massive profits on their investment in Pakistan.
"Profit and dividend payments to foreign investors on their direct and portfolio investment determine the profitability of their capital in the country and Pakistan's liberalised policies have allowed foreign investors to take away profits or dividends and their capital investment through authorised dealers or banks without any restriction," they added.
Repatriation under FDI has surged by 15 percent or $66.5 million during the period. Foreign investors have repatriated $521.4 million on account of return on FDI in July-April of fiscal year 2011 compared to $455 million in the same period of last fiscal year.
However, return on foreign portfolio investment has declined by 17 percent in first ten months of current fiscal year. Return on foreign portfolio investment stood at $128.5 million against $154.7 million. Some 13 sectors, out of 36, showed downward trend in the repatriation of profit, while remaining all sectors depicted some increase. Food, textile, auto, oil and gas, fertiliser, transport and financial services are some leading sectors wherefrom millions of dollars have been sent abroad by foreign investors on account of profit and dividend.
The major repatriation was registered from financial business, wherefrom foreign investors repatriated $149.7 million in first ten months of current fiscal year compared with $78.7 million of same period of last fiscal year. Similarly, with an increase of 24 percent, oil and gas exploration sector is on second number, wherefrom foreign investors sent $103 million abroad in July-April 2011 as against $83 million in corresponding period of last fiscal year.
Repatriation from oil and gas sector registered an increase of 72 percent to $75 million; transport sector repatriation stood at $57.2 million during the period under review, while not a single penny was sent abroad from beverages, ceramics and tobacco sectors.
It may be mentioned here that repatriation of profits constitutes remittances on account of profit earned by branches of foreign companies operating in Pakistan to their Head Office abroad. Dividends are the distribution of earning allocated to shares and other forms of participation by foreign investors in the equity of incorporated enterprises in Pakistan.