KARACHI: Inflow of foreign investment in the country has yet to pick up pace, but outflows in the shape of profits and dividends have surged.
A report issued by the State Bank said on Wednesday that the outflows (dividend and profit) on foreign investments during July-November 2014-15 rose to $606 million which was about 30 per cent higher than the foreign direct investment (FDI) in the same period last fiscal year.
In November, the country received just $20m FDI while repatriation in the shape of profits and dividends stood at $200.9m.
Government’s efforts to attract foreign investment, particularly from China, may be commendable, but actual inflows have yet to materialise, the official data confirms.
The foreign investment in the first five months of this fiscal year was $422m, which was slightly better than last year’s $354m.
However, most of the investment was focused in few sectors, like oil and gas exploration, power sector, telecommunications and financial business.
The country has been borrowing heavily from the international bonds market at high interest rates which helped it to boost its reserves.
It has also borrowed from the IMF to manage its image in the world.
All this money has to be returned with interest and weak inflow of foreign investment can put the country into trouble.
The country has signed memorandum of understanding (MoUs) worth $30bn with the Chinese government and the private sector.
The IMF recently warned that the country could not achieve its growth target unless terrorism is controlled.
The SBP report says the highest amount of $107m was paid as dividends and profits for the financial business while the FDI on this sector was just $25m during the five months of the current fiscal year.
Second big amount of $101m was paid for the telecommunication sector while the FDI in the sector during the five months was $147m.
The highest amount was received as FDI for oil and gas exploration which was $149m while payment in the shape of profits and dividends stood at $37m.
The report said that FDI worth $48m was withdrawn by the pharmaceutical sector while $8m profit was also paid to the sector.
Published in Dawn, December 25th, 2014