July-February period: repatriation of profit crosses $1 billion mark

Repatriation of profit and dividend by foreign investors has crossed $1 billion mark in the first eight months (July-Feb) of this fiscal year (FY16), mainly due to improved economic condition. Analysts said that positive economic developments have also resulted in the higher repatriation of profit and dividend by investors and since the beginning of this fiscal year the repatriation of profit is on the increase supported by improved productivity in major services and goods sector. "The rising repatriation trend also witnessed that foreign investors are getting healthy profit on their investments in Pakistan," they added.
They said a major outflow has been witnessed from financial business, communication, power, oil and gas exploration and food sector as foreign investors have heavily invested in these sectors during the past few years. According to State Bank of Pakistan (SBP), foreign investors have repatriated some $1.14 billion of profit and dividend on foreign investment (including return on Foreign Direct Investment and Foreign Portfolio Investment) during July-February of FY16 compared to $950 million in the same period of FY15, depicting an increase of 20 percent or $191 million.
A detailed analysis revealed that the repatriated amount is even higher than Foreign Direct Investment (FDI) arrived during the period under review. The country fetched some FDI amounting to $890 million during July-February of FY16. During the period under review, repatriation from FDI and Foreign Port Portfolio Investment (FPI) rose by 14 percent and 73 percent, respectively. Repatriation of profit and dividend on FPI surged to $250.52 million in first eight months of this fiscal year against $116 million in the corresponding period of last fiscal year, depicting an increase of $84.52 million.
In addition, with an increase of $106.5 million, foreign investors transferred $890.4 million on account of returns on FDI during July-February FY16 compared to $784 million in FY15. During the period under review, among FDI profit and dividend highest repatriation has been made from financial business as some $170 million have been repatriated on this account. Power sector is the second largest sector with repatriated amount of Rs $146 million on account of profit and dividend and interestingly, the entire amount has been transferred from thermal sector. An amount of $73.1 million has been repatriated from oil and gas exploration sector, $75 from food, $45 million from tobacco and an amount of $46 million have been repatriated from petroleum refining.
In order to encourage foreign investment in the country, the federal government had adopted a liberal policy, which allows foreign investors to repatriate 100 percent profit and dividend earned in Pakistan. Accordingly, taking the full advantage of the government's policy, foreign investors are rapidly transferring their earnings abroad.