KARACHI: Repatriation of profits by foreign companies operating in Pakistan rose 27 per cent to $1.271 billion in the first nine months (July to March) of this fiscal year from $1.001bn, the State Bank of Pakistan (SBP) said on Thursday.
However, during the same period, the inflow of foreign direct investment (FDI) was $957m.
The biggest outflow, at $293 million, was observed from the financial sector compared to an inflow of $19.6m during the nine months. In most cases, the inflow of FDI was lower than the outflow as profits and dividends.
The highest inflow ($471m) was noted in the power sector compared to an outflow of $159m. The oil and gas exploration sector witnessed an inflow of $223.8m while profits and dividends from this sector were $115m.
The food sector noted a disinvestment of $16m while the outflow of profits rose to $82m during July-March 2015-16.
The cement sector received $7m as FDI while the outflow was $63m. The chemical sector received $54m compared to an outflow of $76m.
The imbalance in inflows and outflows could cause a serious problem for the government, which depends largely on borrowing to keep the foreign exchange reserves above $20 billion.
This imbalance is also a cause of concern in the context of widening trade gap as exports are waning.
The highest disinvestment was noted in the petrochemical sector which witnessed a net outflow of $136m.
FDI in telecommunications, which had been the most attractive sector for foreign investment, was limited to $73m while the outflow as profits and dividends was of $115m.
The government has been struggling to attract foreign investors since the start of the preceding fiscal year.
A slight increase in the foreign investment could not meet the trade gap despite record remittances sent by overseas Pakistanis.
During the nine-month period under review, the country’s current account deficit was $1.6bn.
Published in Dawn, April 29th, 2016
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