KARACHI: Repatriation of profits and dividends of multinational companies operating in Pakistan reached close to $1.5 billion during the first 10 months (July-April) of this fiscal year, the State Bank of Pakistan (SBP) said on Thursday.

This makes the current situation even more complicated for the country as it has to pay over $8bn in debt servicing during the next fiscal year.

The repatriated amount was almost equal to the country’s current account deficit, which is a cause of concern for the government amid falling exports, poor foreign direct investment (FDI) and increasing oil prices.

The price of crude oil crossed $50 a barrel on Thursday while FDI stood at above $1bn during the 10-month period.

A negative agriculture growth during the current fiscal year and a plunge in cotton production have left no hope for improvement in the exports, which means trade gap will further widen.

Exporters have been asking the government to release their held-up refunds worth billions of rupees while the government is struggling to hold the revenue growth level from falling further. Exporters hold the government responsible for floundering exports.

The SBP reported that repayment on FDI during the period under review was $1.138bn, much higher than $962 million during the same period of the last fiscal year.

Besides, $317m was paid on foreign portfolio investment; the amount was just $224m a year ago.

What kind of investments is more profitable in the country are also visible from the inflows and outflows from Pakistan.

The best profits and dividends were going out from the financial business (banking) as the repatriated amount from this sector reached $233m while the inflow was just $23m during the 10-month period. Investors from Arab countries had biggest foreign investment in this sector.

The second highest outflow was from the telecommunication sector as the amount of reverse remittances reached $163m while FDI during this period was $72m. The outflow from oil and gas exploration rose $102m while the inflow as FDI during this period was $234m.

Thermal power, which attracted $123m as FDI, sent abroad $155m as profits and dividends. The petrochemicals painted a dismal picture as the sector witnessed a net disinvestment of $136m during this period.

International food chains have shown rapid growth in the country and their profitability is much higher than many countries as they sell their products at comparatively higher prices in Pakistan.

Profits and dividends sent abroad from the food sector during the 10 months reached $82 million. This was only repayment on FDI while $2.5 million went abroad from this sector as foreign portfolio investment (FPI). Collectively, the outflow from this sector was about $85.2m.

The FDI pattern showed that the food sector has stopped investing in Pakistan; in fact, a disinvestment of $16m was noted in FY16.

Published in Dawn, May 27th, 2016

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Afghan turbulence
19 Mar, 2024

Afghan turbulence

RELATIONS between the newly formed government and Afghanistan’s de facto Taliban rulers have begun on an...
In disarray
19 Mar, 2024

In disarray

IT is clear that there is some bad blood within the PTI’s ranks. Ever since the PTI lost a key battle over ...
Festering wound
19 Mar, 2024

Festering wound

PROTESTS unfolded once more in Gwadar, this time against the alleged enforced disappearances of two young men, who...
Defining extremism
Updated 18 Mar, 2024

Defining extremism

Redefining extremism may well be the first step to clamping down on advocacy for Palestine.
Climate in focus
18 Mar, 2024

Climate in focus

IN a welcome order by the Supreme Court, the new government has been tasked with providing a report on actions taken...
Growing rabies concern
18 Mar, 2024

Growing rabies concern

DOG-BITE is an old problem in Pakistan. Amid a surfeit of public health challenges, rabies now seems poised to ...