KARACHI: Repatriation of profits was 26 per cent higher than the inflow of foreign investment during the first half of the current fiscal year.
The State Bank of Pakistan (SBP) reported on Tuesday that the total outflow of profits and dividends was $892 million while the total foreign investment was $708m during the July-December period of 2020-21.
Moreover, the profits on foreign direct investment (FDI) during the first half was $840m, higher than the outflow of $743m. Payments on portfolio investment dropped to $52m against the payment of $93m in the same period of last year.
Amount exceeds total foreign investment in same period
The country received a total foreign investment of $708m in the period under review against $1,376m in the same period last year. The total foreign investment declined due to net outflow of $244m from portfolio investment.
The inflow of FDI during the first six months of FY21 was $952m, higher than the total foreign investment $708m due to net outflow of $244m portfolio investment.
The details showed that food sector recorded the highest outflow of $171.5m during the first half of the current fiscal year compared to an outflow of $53m in the same period last year.
The outflows from the financial sector (banks) was $122.5m during the period under review almost the same as of last year’s $125.5m.
The communication sector witnessed a sharp growth in outflow at $119.3m compared to $33m in the same period of last year. Telecommunications saw an outflow of $105m reflecting the higher use due to the Covid-19.
However, a big fall was noted in the profit outflow from the transport and oil & gas exploration sectors as it fell to $74m and $69m, respectively, during July-December compared to $139m and $112m in the same period of last year.
Profit outflow from tobacco and cigarettes also noted sharp increase as it rose to $76.5m in the first half against an outflow of $35m during the same period last year.
The United Kingdom earned the highest profit of $304m doubled from $156m in the same period of last year.
The other top profit earners were United States and Malta with $134m and $92m respectively.
China which has been investing heavily in the country and the largest trade partner of Pakistan, could earned a profit of $36m during the first half of FY21. In fact, the profits declined this year as it was $92m in the same period of last fiscal.
The details also showed that the foreign investment (mostly FDI) proved profitable in Pakistan despite the Covid-19 pandemic which affected businesses in and outside the country.
Published in Dawn, January 27th, 2021