KARACHI: Outflow of profits and dividends on foreign investments from the country have increased by 26 per cent in the first seven months of the 2017-18, putting more pressure on country’s ability to make payments on its foreign obligations.

The State Bank of Pakistan (SBP) reported on Monday that the country paid $1,343 million as profits and dividends during July-January FY18 compared to $1,067m in the same period of FY16. It included $170m payments on foreign portfolio investment (FPI).

While the payments on foreign direct investments (FDI) increased by 38pc compared to the corresponding period of 2016-17, the net FDI witnessed a fall.

According to SBP report, the country received net FDI worth $1,488m versus $1,532m last year, reflecting a decline of $44m. The payments on FDI were $1,173m in FY18 as against $852m or 38 per cent higher.

However, the country is also facing a serious problem of low FDI from countries other than China. During the seven months of FY18, the Chines share was 67pc ($1 billion) of the total FDI.

Highest outflow of profits was from telecommunications, amounting to $166.2m during July-January. However, there was a net outflow of foreign investment from this sector to the tune of $26m during the same period.

Oil and gas exploration noted a balance as the profit outflow was $142m while the inflow of FDI was $120m.

Power sector received the highest FDI, worth $542m, in this period and the profits outflow stood at $138.5m. This was the only sector to have showed a strong positive result for the country.

The lowest outflow of profits was from the construction sector which received the second highest FDI during FY18. The sector received FDI worth $385m while the outflow of profit was just $1m. For the last two years, the construction sector has attracted foreign investors due to its higher returns.

The profit outflow from food sector was much higher than the FDIs it received during 2017-18. The sector received just $24m as FDI while the outflow of profits from the sector amounted to $137m in the same period.

Financial sector (banks) noted a balance as the sector received $178m as net FDI and paid profits valuing at $138 to the foreign investors.

Published in Dawn, February 27th, 2018