Profit repatriation by foreign businesses increased at a much higher pace than the growth of foreign direct investment (FDI) in Pakistan during fiscal year 2017-18, according to data released on Monday by the State Bank of Pakistan (SBP).
The repatriation of profit increased by 15.74% compared to FDI’s meagre growth of 0.8% in fiscal year 2018.
The businesses repatriated $2 billion to their parent companies and made FDI worth $2.76 billion in the year – showing a net inflow of $0.76 billion.
“The growth in repatriation may be attributed to rupee depreciation,” Overseas Investors Chamber of Commerce and Industry (OICCI) Secretary General M Abdul Aleem
The rupee has depreciated 17.74% to Rs124.22 against the US dollar in the inter-bank market since December 2017.
The depreciation would have convinced businesses to repatriate a higher amount to take benefit of the rupee-dollar parity and avoid any unfavourable situation on the exchange rate front in the near future, he added.
He, however, said OICCI members have reinvested in Pakistan during the year.
“Our members have reinvested $2.7 billion in FY18 that is equivalent to FDI received during the year,” he said. “The reinvested amount would not have fully reflected in FDI as many [OICCI] members have opted to retain the profit in Pakistan and then reinvest.”
Overseas Jobs
