Multinational companies (MNCs) operating in Pakistan have transferred abroad 52 percent of the total inflow of foreign direct investment (FDI) as profit and dividends in 11 months of the FY11.
From July 2010 to May 2011 the MNCs have transferred $725 million while companies have recorded an inflow of $1.392 billion in foreign direct investment in the period under review.
Data gathered by Pakistan Today illustrated that in 11 months of FY11 the overall repatriation of profit by the MNCs remained undiminished. The MNCs sent abroad $725 million as profit/dividend from July 2010 to May 2011 compared to $729 million the MNCs sent to their mother companies in the corresponding period of FY10. In terms of percentage, the repatriation of profit during FY11 reflected a negligible decrease of 0.6 percent.
Thus the overall repatriation of profit abroad by MNCs was unaffected in 11 months of the concluding FY11. Multinational firms engaged in the fields of finance, thermal power generation, oil and gas exploration, transport and food have recorded a substantial increase in their profit while other entities showed a mixed trend in their earnings.
Financial companies including banks and thermal power generation companies have taken the lead in sending the highest amount of foreign exchange as profit and dividend to their parent organisations.
Financial firms have repatriated $158 million as profit or dividend from July 2010 to May 2011, showing an increase of 69.4 percent when compared the repatriation of $93.2 million profit in the corresponding period of FY10.
Thermal power entities have transmitted $104 million in FY11, up by 9.4 percent in comparison with the transfer of $95 million profit in July-May FY10.
Oil and gas exploration companies had also sent abroad in $75 million profit and dividend in 11 months of 2010-11. The transfer of profit by this sector showed 47 percent growth as these entities had sent $51 million in comparable period of FY10.
MNCs engaged in the food business had transferred $65.3 million to their mother companies in FY11, showing an increase of 15 percent in the transfer of profit/dividend abroad. In FY10 these companies had transferred $57 million abroad. Meanwhile, the inflow of foreign direct investment in 11 months of outgoing fiscal showed a marked decline of $589 million. In FY10 an inflow of $1.981 billion FDI had been recorded from July-May period, whereas in the same period in FY11, FDI inflows fell to $1.392 billion.
The current trend of the repatriation of profits by multinational companies in the outgoing fiscal underlines that the overall financial performance of MNCs is relatively encouraging at a time when the country is in the midst of crisis, suffering from a worsening energy crisis, a tug-of-war between the major political parties and thorny relations between Pakistan and the United States over the war on terror.
This positive phenomenon should encourage MNCs to expand their operations in Pakistan and generate more foreign direct investment along these lines.
