KARACHI: Despite slow economic growth in the country, foreign investors transferred an amount of over $1 billion aboard on account of profit and dividend during last fiscal year 2011-12 (FY12). The repatriation of profit was on decline during FY11 because of slow economic activities followed by global meltdown, which directly hit the profit of foreign as well as domestic companies.
During the tenure of President Pervez Musharraf, the government allowed 100 percent transfer of profit or dividend to foreign investors to attract foreign investment in the country. Fresh statistics of the State Bank of Pakistan revealed that repatriation of profit and dividend by foreign investors is again on surge and they are repeatedly transferring their profits and dividends on portfolio and Foreign Direct Investment (FDI).
According to SBP as the foreign investors are rapidly transferring their earnings on investment the repatriation of profit and dividend has registered a healthy growth of 40 percent during last fiscal year. Cumulative, foreign investors have repatriated some $1.061 billion on account of profit and dividend in FY12 against $758.3 million in FY11, depicting an increase of $303 million.
Repatriation of profit and dividend has been registered from both components of foreign investment ie portfolio and FDI, the major outflow of profit and dividend has been witnessed from the FDI and cumulatively, over 80 percent of repatriated amount has been sent from returns on FDI. Although, during FY12, FDI inflows fell to $812.6 million from $1.63 billion in FY11, repatriation of profit on FDI posted an increase of some 36 percent or $206 million in last fiscal year.
Foreign investors sent abroad $780.3 million on account of return on FDI during FY12 compared to $574.3 million in FY11. With an increase of $97 million, some $281 million has been repatriated on account of return on portfolio investment in FY12 coompared to $184 million FY11. Economists said current increase in outflow of profit and dividend also indicates that Pakistan's overall economy is gradually improving and foreign companies have also earned more than a year earlier.