KARACHI
The telecommunications and thermal power companies have far outstripped other multinational companies (MNC) in the country in the repatriation of their profits to their home bases, in the first quarter of 2011.
Telecommunications companies, operating in Pakistan, transferred abroad 50 million dollars in profit and dividends, displaying a considerable rise in the repatriation of the profit of 34 percent compared to the same time in the previous year. Similarly, the foreign companies producing thermal power in the country doubled the rate of repatriation of profits.
In the July-Sept FY11 quarter, thermal power companies transferred 10 million dollars in profit and dividend. In the corresponding period last year, in comparison, these companies send only five million dollars abroad. According to the State Bank’s analysis of repatriation, the overall repatriation of profits on the part of MNCs operating in Pakistan registered a negligible decline of 1.1 percent in the relocation of profit in first quarter of FY11.
MNCs send 125 million dollars in July-Sept FY11 compared to repatriation of 126.3 million dollars in July-September FY10. Food companies also added to the profit outflow and send seven million dollars to their countries of origin in first quarter of this fiscal, compared with the transfer of three million dollars in the same period last fiscal year, representing an increase of 133 percent.
Furthermore, beverage companies, textile, chemicals, petroleum refining, oil and gas exploration, fertilizers, transport equipment, buses, trucks, vans, trade, storage and personal services providing foreign companies reported a substantial decrease in their profit. It should be clarified that MNCs send abroad an amount of profits equivalent to 37 percent of the foreign direct investment registered in the quarter.
The inflow of foreign investment, received by the MNCs, indicated a decline of $41 million. Foreign companies received $387 million in first three months of this fiscal compared to 428 million dollars in the same period last year. The performance of foreign companies in the country has been mixed. Some reported a steep decline in profit while some others showed healthy earnings.
Analysts believe that an insignificant decline of 1.1 percent in the repatriation of profit by foreign companies reveals that MNCs are confident on the long term economic viability of their investments despite the economic slowdown and reduced development budget in the wake of the devastation wreaked by the floods and the alarming rate of inflation.
