Jul-Feb repatriation of profit, dividend plunge 80pc YoY: Import curbs hurt investors in equal measure

KARACHI: Repatriation of profit and dividend by foreign investors plunged drastically during the first eight months of this fiscal year (FY23) due to economic slowdown.

The State Bank of Pakistan (SBP) on Monday reported that foreign investors repatriated $225.1 million during July-Feb of FY23 as compared to $1.146 billion during the same period of last year, depicting a decline of 80 percent or $ 921 million.

Analysts said the massive decline in repatriation of profit and dividend reflect that earnings of foreign companies have been down drastically due to poor economic conditions. The country’s economy is facing a number of challenges, particularly foreign exchange crisis that forced the government to impose restrictions on imports to curtail the trade deficit.

Foreign investors: Q1 repatriation of profit, dividend plunges 88pc YoY

Production of large scale manufacturing industries including automobiles, food, textile, petroleum oil and pharmaceutical registered a drop of 7.75 percent in October 2022 compared to the same month of previous year. Leading auto plants have also shut down their production due to shortage of raw material.

Pakistan’s GDP growth is also estimated at 2 percent during the FY23 as against 6 percent in FY22. This slowdown will also hurt the profitability of foreign companies, analysts said.

The detailed analysis revealed that during the period under review repatriation from Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI) declined by 82 percent and 67 percent respectively.

Repatriation on account of FDI was $188 million during July-Feb of FY23 down from $ 1.038 billion. Repatriation from FPI fell from $ 108.6 million to $ 37 million in the first eight months of this fiscal year.

The highest outflow of profit and dividends amounting to $87 million was sent from the Oil & Gas Explorations, $33 million from the mining sector, and $32 from power and $19 million from the financial sector.

Copyright Business Recorder, 2023