New data from the State Bank of Pakistan regarding foreign investment in Pakistan has come to light, according to which the return of profits of foreign companies has accelerated. A total of $1.7 billion was transferred abroad in the first seven months of the current fiscal year, which is about 28 percent more than last year. These figures show that Pakistan’s local market is still attractive to foreign investors, especially in the financial and energy sectors; the rate of profit has been very stable.
According to the report, foreign companies operating in the financial sector have sent back profits of $371.33 million. High interest rates and improved operating margins in the banking sector helped these companies earn record profits. On the other hand, the energy sector recorded a return of $400.19 million. The increase in profit repatriation in the energy sector is also significant because there is large foreign investment in IPPs and other power projects in Pakistan. The October data also suggests that the process of foreign investment inflow and profit repatriation has now become smoother.
Interestingly, the UK and China are the most prominent among the countries receiving profits from Pakistan. $442.76 million was sent to the UK, which is a sign of the strong foothold of British companies in Pakistan. China, which is a major investor in Pakistan through CPEC and other projects, came in second with a return of $413.11 million. Although these payments are a burden on foreign exchange reserves, experts believe that if the process of profit repatriation continues at the same pace, it will pave the way for more foreign direct investment (FDI) in the future.