Foreign investors from the United Kingdom (UK) repatriated the highest profits worth $546 million to their headquarters from Pakistan during the outgoing financial year 2020-21.
According to the State Bank of Pakistan (SBP), the profit repatriation made by foreign investors and multinational companies surged 93 percent higher than the profit repatriation of the previous year.
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Currently, more than 120 British firms are operating and investing in Pakistan. The major UK businesses succeeding in Pakistan include the Mott MacDonald infrastructure development (which played an integral role in the development of the new Islamabad airport); Unilever and Reckitt Benckiser in the consumer goods sector; Standard Chartered and United Bank Limited (UBL) in banking; Oxford University Press in education, GlaxoSmithKline in pharmaceuticals; Shell in oil and gas; and the UK brands Debenhams, Toni and Guy, and Monsoon and Accessorize.
On the other hand, the inflows from the UK during the period had stood at $515 million, according to the SBP’s data.
Foreign companies and investors from the United States of America made the second-highest profit repatriation, which had stood at $270 million by the end of FY21.
Total Profit Repatriation in FY21
Foreign investors had repatriated $1.622 billion on account of profit and dividends during the last financial year 2020-21.
With improved economic activities, the repatriation of profit and dividends by foreign investors had risen by 20 percent during July-June FY21. The higher outflow of profit and dividend also reflects that foreign investors are getting better margins of their investments in Pakistan.
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The SBP data showed that foreign investors had repatriated around $1.622 billion during the last fiscal year. This is $276 million more than the previous fiscal year’s recorded repatriation of $1.346 billion.
A detailed analysis revealed that the major outflow of profit and dividend had been recorded from the Foreign Direct Investment (FDI), and cumulatively some 92 percent of the repatriated amount had been sent as returns on the FDI.
During the period under review, the repatriation on account of the FDI had posted an increase of 24 percent increase, while the repatriation from the Foreign Portfolio Investment (FPI) had recorded a slight decline of seven percent.
The repatriation of profit and dividend on account of the return on the FDI was $1.49 billion during July-June FY21 against a $1.2 billion outflow in the corresponding period of FY20.
The repatriation of profit and dividend on account of the FDI is lower than the overall FDI which had amounted to $1.84 that had arrived in Pakistan during the last fiscal year.
Similarly, foreign investors had repatriated $132 million on account of the returns on portfolio investments in FY21, down from $143 million in FY20.
The highest outflow of profit and dividends amounting to $337 million had been from the financial sector, followed by $231 million from the food sector during the last fiscal year.
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An amount of $234 million was repatriated from communication, $136 million from transport, and $134 million from chemicals.
On a Month-on-Month basis, foreign investors had repatriated $126 million, including $108 million of FDI returns and $17.7 million of returns on portfolio investments in June 2021.
Pakistan has allowed a 100 percent transfer of profit and dividend for foreign investors to attract foreign investment in the country.
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