Karachi, June 28, 2023: Repatriation of profit and dividends by foreign investors from Pakistan has experienced a significant decline, plunging by 80 percent during the eleven months of the fiscal year 2022-23, according to data released by the State Bank of Pakistan (SBP).
The figures reveal that the repatriation of profit and dividends reached $313 million during this period, in stark contrast to the $1.6 billion recorded in the corresponding months of the previous fiscal year.
Experts attribute this sharp decline in repatriation to the restrictions imposed by Pakistan on the outflow of dollars, which were implemented to support the country’s balance of payments. Multinational companies operating in Pakistan have encountered difficulties in repatriating their dividends in recent quarters due to these constraints on dollar outflows. The Overseas Investors Chamber of Commerce and Industry (OICCI) emphasized this issue earlier this year.
M. Abdul Aleem, the Secretary General of OICCI, while talking to a daily newspaper, explained that the repatriation of profits in the form of dividends to the overseas headquarters of foreign companies has been suspended since the beginning of the 2022-23 fiscal year. This problem affects all multinational companies operating in Pakistan, regardless of their size or sector. According to a survey conducted among OICCI members, this issue was not prevalent before April 2022.
Furthermore, the repatriation of profit and dividends in relation to Foreign Direct Investment (FDI) experienced a sharp decline of 82 percent, amounting to $257 million during July to May 2022-23, in comparison to $1.45 billion during the same period in the previous fiscal year. Likewise, repatriation of profit and dividends associated with foreign portfolio investment (FPI) also saw a decline, reaching $56 million in the reviewed period, as opposed to $153 million in the corresponding period of the previous fiscal year.
The decrease in repatriation of profit and dividends from Pakistan raises concerns about the attractiveness of the country as an investment destination. It is crucial for policymakers to address these issues and create a favorable environment for foreign investors, ensuring the smooth repatriation of their profits and dividends.
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