September 28, 2021 (MLN): Multinational companies operating in Pakistan repatriated $396.4 million in profit and dividends on investments in the country during the first two months of the ongoing fiscal year which was 3% lower than the profits of $407.6mn repatriated in the corresponding period last year, the central bank data showed on Tuesday.
This was due to improved profitability and macroeconomic indicators which strengthened foreign investors’ confidence in Pakistan’s economy. The survey conducted by the Overseas Investors Chamber of Commerce and Industry (OICCI), which is the representative body of foreign investors and multinationals operating in Pakistan, also revealed that the overall Business Confidence Score (BCS) in Pakistan now stands at a positive score of 9 percent, a record improvement by 59 percent from the previous negative 50 percent score in Wave 19 Survey conducted in May 2020.
The data further revealed that during the period, foreign companies repatriated $372.8mn worth of profit against the foreign direct investments (FDI) in various businesses compared to $391.7mn in SPLY. While the outflow as payment against portfolio investment stood at $23.6mn, compared with $15.9mn in the same period a year earlier, marking a significant growth of 49% YoY could be ascribed to the reclassification of Pakistan in the MSCI.
To note, Foreign direct investment (FDI) fetched by the country during July-Aug FY22 amounted to $203.1mn, down by 20.3% YoY from $254.8mn in the corresponding period last year.
However, in the month of Aug’21 alone, repatriation of profits and dividends on investment by the foreign firms increased by 4.5x YoY to $237.2mn, data showed.
The data shows that the major sectors that repatriated relatively higher profits include the Communication sector, Food, Financial Businesses, Transport, Chemicals, and Food Packaging, among which the Communication sector repatriated the highest profits of $83.7mn during the month to overseas, against $65.7mn in the same period last fiscal year, showing a slight growth of 27% YoY.
The data further revealed that Profit outflows from the Food sector clocked in at $83.5mn while during July-Aug FY21, the sector fetched a net $99.9mn as profit. Profits outflow from the Financial Businesses declined by 15%YoY to $76.6mn against an outflow of $90mn in 2MFY21.
The Transport sector repatriated $34.5mn during the period under review, which was 1.23x lower when compared with $27.9mn in the same period previous fiscal year.
The Chemical sector repatriated 62% higher profits during the period under review which amounted to $30.2mn, while in the same period of FY21, the sector repatriated $18.7mn.
The Food Packaging sector repatriated $26.8mn, whereas, in the corresponding period last year, the sector did not fetch any profits.
A country-wise break up of data on repatriation of profit released by SBP revealed that firms and individual investors belonging to the UK dispatched the single largest profit of $94.8mn during the period compared to $197.8mn in the same period prior fiscal year.
The United States witnessed the repatriation of the second-highest profits as the country repatriated $86.9mn abroad during the period under review, compared with $57.8mn in the previous year.
Third in line is Netherlands which repatriated $47.3mn from Pakistan during 2MFY22, up by 7.4x YoY as last year during July-Aug FY21, the country remitted only $6.4mn as profit income from Pakistan.
Next followed by Switzerland with profit repatriation of $41.4mn which was 2.3x YoY higher when compared with last year's figures.
Copyright Mettis Link News