MNCs’ profit repatriation jumps 25pc
KARACHI: The outflow of profits and dividends on foreign investments from the country increased more than 25 per cent in the first quarter of 2017-18, the State Bank of Pakistan reported on Thursday.
It amounted to $385.6 million in July-September compared to $307m in the same quarter last year.
Repatriations have been increasing every year although foreign investments have remained low for more than five years.
However, the net inflow of foreign direct investment (FDI) during the quarter increased 56.5pc to $662m.The highest outflow, amounting to $78.6m, was from financial businesses in the quarter. The sector received a net FDI of $71m during the same period.
The power sector witnessed an outflow of $48.8m, second highest in the quarter. It received $268.2m in FDI, which was the highest amount any sector attracted from overseas investors during the same quarter.This was due to the China-Pakistan Economic Corridor as most investments are in the power sector.
The significant jump in FDI during the first quarter was mainly due to Chinese investments, which constituted about 65pc of total inflows over the three-month period.
With $123.8m, construction emerged as the second biggest destination for foreign investments in the quarter. Yet the outflow in the form of profits and dividends from the sector remained zero over the same period.
The petroleum refinery sector received FDI of $0.6m in the first quarter while the outflow from the sector was $47.3m, indicating it is not attracting fresh investments.
Another major outflow was witnessed in the food sector with the repatriation of $39.5m in the first quarter. It attracted just $2m in FDI in the same period.
Telecommunication received $64.8 in FDI in the first quarter while the outflow of profits and dividends from it was $40.2m.
Total foreign investments, including the foreign portfolio investment (FPI) of $41.2m, amounted to $426.8m during the first quarter, up 27.5pc year-on-year. FPI was $27.6m in the first quarter of 2016-17.
Published in Dawn, October 27th, 2017