KARACHI: The outflow of profits and dividends on foreign investment crossed $1 billion during the first eight months of the current fiscal year (8MFY21), reflecting healthy growth of companies having foreign investments.

The State Bank’s latest data issued on Monday reveals that the total outflow – including $64 million of portfolio investment – during July-Feb FY21 was $1.050bn compared to $974m in the same period of last fiscal, marking an increase of $76m.

Details showed that the highest payment as profits and dividends were paid on foreign direct investment which totaled as $985.8m compared to $869m in the same period of last fiscal year.

The profits on portfolio investment were significantly lower this year at $64.7m compared to $104.7m in the same period of last fiscal year.

The manufacturing sector paid 50 per cent more profits this year compared to last year. The sector paid the highest profits $418.4m compared to all other sectors. Last year the total profits outflow from this sector was $278.5m.

The large profits of the manufacturing sector showed that the sector was not impacted badly by the Covid-19 pandemic. The government is taking a number of steps to curtail negative impact of the rising wave of the pandemic. Export-based manufacturing showed large activities during the current fiscal year and the exporters claim that they have orders more than their production capacity.

The finance and insurance sector maintained growth as the profits outflow from this sector was $126m compared to $125m in the same period of last fiscal year. However, the outflow of profits from transport and communication dropped to $129.6m during the 8MFY21 compared to $160m in the same period of last fiscal year.

The information and communications sector showed significantly high growth as the profits increased by 268 per cent compared to the last year. The profit outflow was $112.3m against an outflow of $30.5m in the same period of FY20.

Mining and quarrying fell sharply this year as profits from the sector dropped to $83.8m compared to $191m in the same period of last fiscal year.

Wholesale and retail trade maintained growth as the profits outflow was almost same of the last fiscal; profits were $100.3m this year compared to $102.4m in FY20.

Most of the sectors particularly manufacturing performed well during the current fiscal which compelled the SBP to review its growth rate estimate to 3pc against its previous estimate to 2pc for FY21.

The best reflection of economic growth and recovery was Large Scale Manufacturing (LSM) which grew further by 10.8pc year-on-year (YoY)) in December 2020 and 9.1pc YoY in January 2021.

Published in Dawn, March 30th, 2021*