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Dividend and profit repatriation on foreign direct invest was almost negligible in FY23 and also lowest in at least the last 15 years. Total repatriation of FDI stood down by 82 percent year-on-year, during 11MFY23, reaching $313 million versus $1.6 billion in similar period last year. And the situation will be no different for FY23. The massive decline in the repatriation of profits and dividends by the multinational companies has come forth due to the fragile foreign exchange reserve position in the country and the resultant curbs by the central bank on dollar outflow including the restrictions on imports to support balance of payments

Furthermore, the fall in MNC repatriation has been attributed to the country's negative economic activity, which has resulted in lower profitability and a decrease in dividend releases by subsidiaries. Earnings and company activity have also declined, forcing existing investors to reconsider and go as they struggle to repatriate profits and dividends due to the dollar scarcity. IMF deal delay has been adding to the miseries of the economy.

The suspension of profit repatriation since the beginning of FY23 can be seen form the illustration where despite FDI of $1.3 billion, the outflow of dividends and profits remained negligible. Market sources suggest that the halt in repatriation was felt across all multinational companies be it small or big; and also across sectors be it power, telecom, transport, energy or food and beverages. Also supported by monthly data released by the central bank, industry experts highlight that the decline in repatriation of dividends and profits started after April 2022.

While MNCs operating in the country have faced immense volatility and instability in the past, this kind of squeeze has not occurred before. It has not only affected the existing foreign investors, but has tainted the investment landscape that is already battling several challenges. Some hope however on the repatriation front has emerged due to the IMF agreement and the possibility of lifting the limit on the foreign exchange outflow.


Comments are closed.

Vaqas Farooqi Jul 17, 2023 08:42am
It’s high time govt should seek assistance from renowned economists rather than accountants to make economic policies like they do in more civilised world.
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Tulukan Mairandi Jul 17, 2023 12:36pm
No wonder foreign investors are exiting this living hell in droves.
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Tariq Qurashi Jul 17, 2023 03:36pm
We need FDI that has an export component; not chicken franchises!
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Asim Jul 17, 2023 04:08pm
@Vaqas Farooqi, You are absolutely right sir , but the core issue is we are not that civilised courtesy of our big brother for the past 75 years - as is evident from the staged events of May 9th and our unprecedented economic demise - by the way these accountant are brought in by the establishment - this time my apprehension is that we may out come of it I.e., successfully as a nation - really looking for a miracle from Allah(swt) otherwise things have become really hopeless. Look at the sharp contrast with our neighbours, look at their foreign minister who has made it to the post on merit and look at ours - still following on the old ancestral politics. We will not be able to succeed ever and I am afraid it may already be too late.
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Ch. K A Nye Jul 17, 2023 04:26pm
@Vaqas Farooqi, Even am accountant with basic knowledge would be better than the clown whose only claim to fame is that he's the Bro-in-law of an absconding criminal.
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