Repatriation of profit, dividend crosses $1 billion mark

Repatriation of profit and dividend by foreign investors crossed $1 billion mark during first 11 months of fiscal year 2013-2014 (FY14), following improved economic activity and rising profitability of companies. Sources in banking industry told Business Recorder on Wednesday that taking full advantage of the government's liberal policy, foreign investors repatriated some $1.157 billion on account of profit and dividend during July-May of FY14 compared to about $1 billion in the corresponding period of FY13, depicting an increase of 15 percent or $147 million.
Repatriation, during first 10 months of FY14, was $985 million, however some $171 million have been transferred during May 2014, of which total repatriated amount has crossed $1 billion mark. "Mainly there are two reasons for the rising repatriation trend - outflow of capital or second higher profitability of multinational companies. We believe that current surge in the repatriation is only because of better productivity as Pakistan's economy is gradually improving and there are no signals of outflow of capital," said Khurram Shahzad, Chief Investment Officer, Lakson Investments.
He said oil and gas, power and financial sector have foreign investment and major outflow has been witnessed from these sectors. With improved productivity, multinational companies have posted higher profits and accordingly over $1 billion have been transferred in first 11 months of last fiscal year. "In order to attract foreign investment, Pervaiz Musharraf government allowed foreign investors to send back 100 percent of profits, dividends or earnings on their investment in Pakistan," Khurram said and added that foreign investors are taking full advantage of this liberal policy and repatriating their earnings abroad.
The detailed analysis revealed that repatriation of profit and dividend from Foreign Portfolio Investment (FPI) registered a decline of 8 percent, while some 20 percent increase has been witnessed on account of FDI. In addition, the major outflows of profit and dividend have also been registered from FDI and cumulatively over 84 percent of the repatriated amount has been sent as returns on FDI.
Foreign investors transferred $967.6 million on account of returns on FDI during July-May of FY14 compared to $806.3 million in FY13. During the period, overall FDI inflows stood at $1.362 billion. In addition, repatriation on FPI posted a decline of $17.5 million as it stood at $189.5 million during first 11 months of FY14 against $204 million in the corresponding period of FY13.
The major repatriation has been made from the financial sector, wherefrom foreign investors repatriated $327 million during the period under review. Power sector is the second largest sector as foreign investors transferred an amount of $144 million on account of profit and dividend. During the period $98 million were repatriated from oil and gas exploration, $93 million food, $69 million petroleum refining and $61 million from transport sector.