Repatriation of profit exceeds FDI: $138.2 million sent abroad by foreign companies in July

Repatriation of profit and dividend by foreign companies operating in Pakistan is higher than Foreign Direct Investment (FDI) arrived in the first month of this fiscal year (FY20). According to State Bank of Pakistan's (SBP) statistics, foreign investors repatriated some $ 138.2 million on account of profit and dividend in July of FY20 compared to $ 136.7 million in the corresponding period of FY19, showing a slight increase of one percent or $1.5 million.
The detailed analysis showed that the repatriation of profit and dividend is much higher than the FDI arrived in the country. Pakistan fetched FDI amounting to $ 73.4 million in July 2019 compared to $ 179 million in July 2018. Economists said that repatriation of profit and dividend by foreign investors always scaled up, when earnings of corporate sector and multinational companies improved. "The repatriation of profit and dividend reflects that despite many challenges Pakistan's economy is still capable of producing better margins on foreign investments," they added.
According to the State Bank, major outflow of profit and dividend was witnessed on account of FDI, which contributed 92 percent share in overall repatriated amount. Foreign investors have sent abroad some $ 126.8 million on account of return on FDI during the first month of the current fiscal year as compared to $ 124.2 million in the corresponding period of last fiscal year.
However, as the Pakistan's equity market is not performing well, repatriation of profit and dividend on account of foreign portfolio investment (FPI) witnessed a declining trend. Repatriation of profit and dividend on account of FPI stood at $ 11.4 million in July of FY20 down from $ 12.6 million in the same period of last fiscal year. During the period under review, the major repatriation was made from the oil and gas sector, transport and financial sector. Foreign investors repatriated $ 29.8 million from oil and gas, $ 28.1 million from transport and some $ 27 million were sent abroad from financial sector.