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KARACHI: Repatriation of dividends and profits on overall foreign investment (including portfolio investment) rose by 22 per cent to cross $1 billion during the first nine months (July-March) of this fiscal year compared to $823 million a year earlier, the State Bank reported on Monday.
However, in terms of attracting foreign direct investment (FDI), Pakistan failed to perform better as it received $710m FDI during the nine months compared to $709m in the same period of last year.
The country paid $824.8m on FDI, higher than inflows, compared with last year’s payments of $677.7m which were lower than inflows.
However, the ratio of repatriation to FDI would change if the Chinese investment is materialised.
The details show that oil and gas exploration witnessed the highest inflows of $204m during July-March while the payments made on this FDI were $55.5m.
The communication sector showed an inflow of $96m versus the payments of $161m. Since the Information Technology registered an outflow of $29m, it reduced the overall inflows in the communications.
The power sector, which has vast potential to grow, could attract $97m while the payments as dividends and profits on this sector rose to $95m.
The government has signed multibillion-dollar projects with the Chinese government, particularly related to the power sector. Pakistan’s economy has long been suffering due to energy shortage but the government has so far failed to bring any major change in this regard.
Financial business also attracted FDI of $83.5m during this period while the repayments to this sector were $133.9m. It shows the previous investment has yielded much better results for this sector, particularly banks.
By contrast, the food sector noted a disinvestment of $14.7m but the payments made to this sector were $73m. Similarly, the metal sector also noted a disinvestment of $41m while the payments to this sector were $80m.
The repatriation of about $1.005bn during July-March 2014-15 by foreign companies did not distress Pakistan’s foreign exchange reserves situation as they crossed $17bn. The trend, however, is alarming and could generate difficulties in the future.
Published in Dawn, April 28th, 2015
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