Repatriation of profit declines marginally during 7MFY22

February 25, 2022 (MLN): Repatriation of profit and dividends by foreign investors mostly remained flat during the first six months of this fiscal year (FY22), the central bank data showed on Friday.

The SBP data shows that multinational companies operating in Pakistan repatriated $1.01 billion in profit and dividends on investments in the country during the first seven months of the ongoing fiscal year which was almost the same compared to the profits of $1.02bn repatriated in the corresponding period last year.

The data further revealed that during the period, foreign companies repatriated $908mn worth of profit against the foreign direct investments (FDI) in various businesses compared to $961.6mn in SPLY. While the outflow as payment against portfolio investment stood at $105.5mn, compared with $63.9mn in the same period a year earlier, marking a significant growth of 65% YoY could be ascribed to the reclassification of Pakistan in the MSCI.

To note, the repatriation of profit on account of FDI is lower than overall FDI which amounted to $1.17 billion during the first seven month of this fiscal year.

Similarly, in the month of Jan’22 alone, repatriation of profits and dividends on investment by the foreign firms increased by 6% YoY to $122.3mn, data showed.

Sector-wise:

The data shows that the major sectors that repatriated relatively higher profits include the Financial Businesses, Food, Power, Communication, Oil & Gas Exploration, and Transport sector among which financial businesses repatriated the highest profits of $167.8mn during the period to overseas, against $136.4mn in the same period last fiscal year, showing a growth of 23% YoY.

The data further revealed that Profit outflows from the Food sector clocked in at $107.7mn while during July-Jan FY21, the sector fetched a net $220.9mn as profit. Profits outflow from the Power sector increased by 3.2x YoY to $98.6mn against an inflow of $30.5mn in 7MFY21.

The communication sector repatriated $106mn during the period under review, which was 11% YoY lower when compared with $119.5mn in the same period previous fiscal year.

The Transport sector repatriated 33% lower profits during the period under review which amounted to $71.7mn, while in the same period of FY21, the sector repatriated $106.3mn.

The Oil and Gas Exploration sector repatriated $80.5mn, whereas, in the corresponding period last year, the sector fetched $75.5mn as profits.

Country-wise:

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 $190.7mn during the period compared to $361.8mn in the same period prior fiscal year.

The United States witnessed the repatriation of the second-highest profits as the country repatriated $149.6mn abroad during the period under review, compared with $195.2mn in the previous year.

Third in line is Switzerland which repatriated $96.6mn from Pakistan during 7MFY22, up by 73% YoY as last year during July-Jan FY21, the country remitted $56mn as profit income from Pakistan.

Next followed by the Netherlands with profit repatriation of $89mn which was 5.5x YoY higher when compared with last year's figures.

Copyright Mettis Link News