Repatriation of profit remains flat during 6MFY22

January 27, 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 Wednesday.

The SBP data shows that multinational companies operating in Pakistan repatriated $892.3 million in profit and dividends on investments in the country during the first six months of the ongoing fiscal year which was almost the same compared to the profits of $891.2mn repatriated in the corresponding period last year.

The data further revealed that during the period, foreign companies repatriated $794mn worth of profit against the foreign direct investments (FDI) in various businesses compared to $840mn in SPLY. While the outflow as payment against portfolio investment stood at $97.2mn, compared with $52.2mn in the same period a year earlier, marking a significant growth of 86% YoY could be ascribed to the reclassification of Pakistan in the MSCI.

To note, the repatriation of profit and dividend on account of FDI is lower than overall FDI which amounted to $1.05 billion during the first six month of this fiscal year.

However, in the month of Dec’21 alone, repatriation of profits and dividends on investment by the foreign firms declined by 20% YoY to $115.2mn, data showed.

Sector-wise:

The data shows that the major sectors that repatriated relatively higher profits include the Financial Businesses, Food, Power, Communication, Chemical and Oil & Gas Exploration sector, among which financial businesses repatriated the highest profits of $163.3mn during the period to overseas, against $133.5mn in the same period last fiscal year, showing a growth of 22% YoY.

The data further revealed that Profit outflows from the Food sector clocked in at $106.3mn while during July-Dec FY21, the sector fetched a net $172.9mn as profit. Profits outflow from the Power sector increased by 3.6x YoY to $95mn against an inflow of $26mn in 6MFY21.

The communication sector repatriated $90mn during the period under review, which was 25% YoY lower when compared with $119.5mn in the same period previous fiscal year.

The chemical sector repatriated 3% higher profits during the period under review which amounted to $62mn, while in the same period of FY21, the sector repatriated $60.3mn.

The oil and gas exploration sector repatriated $55.3mn, whereas, in the corresponding period last year, the sector fetched $73.8mn 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 $170.3mn during the period compared to $318mn in the same period prior fiscal year.

The United States witnessed the repatriation of the second-highest profits as the country repatriated $146.7mn abroad during the period under review, compared with $152.6mn in the previous year.

Third in line is Switzerland which repatriated $90.7mn from Pakistan during 6MFY22, up by 64% YoY as last year during July-Dec FY21, the country remitted $55.4mn as profit income from Pakistan.

Next followed by the Netherlands with profit repatriation of $70.5mn which was 4.6x YoY higher when compared with last year's figures.

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