Multinational companies in the telecom sector continue to reap the benefits of their billion-dollar investments in mobile broadband services in the country. Telcos have witnessed an improvement in the profit repatriation to their headquarters, reaching $327 million in the financial year 2017-18 — the highest among all sectors.
According to the State Bank of Pakistan (SBP), the profit repatriation of the telecom sector has increased by 83 percent in the outgoing financial year (FY18) as compared to the profit of $177.8 million sent back to various countries by the telecom companies.
On the other hand, the telecom sector made a foreign direct investment of $72.4 million during FY18 compared to an outflow of 90 million FDI recorded in FY17.
Hence, not only did the telcos register handsome dividends for their investors but they continued to pour in money in the Pakistani market for the expansion of their network and services.
The financial sector comes in second in terms of profit repatriated to the foreign sponsors and investors. It stood at $314 million in FY18, according to the latest figures updated by SBP.
As the parent companies of major telcos are running their own microfinance banks and branchless banking services, their share in the profits repatriated must be significant in the outgoing financial year.
All three microfinance banks including Telenor Microfinance Bank, Mobilink Microfinance Bank and U microfinance reported impressive profits. Pakistan has proven to be a lucrative market for telecom giants in both, the banking and telecom sectors.
Oil and Gas Exploration and Production sector came in third, witnessing a handsome profit repatriation of $259 million in FY18. It is followed by the Power sector with $240 million dividends and the Food sector with $215 million dividends sent back to the home countries.
Profit Repatriation Grows 15.5% in FY18
Pakistan is an attractive country for multinational companies and foreign investors, offering lucrative profits for these companies which not only make money but manage to send a handsome part of their earnings to the respective countries as well.
The profit repatriation made by multinational companies and foreign investors increased by 15.5 percent in FY18 compared with the previous financial year.
According to the SBP statistics, the profit repatriation made by foreign countries in different sectors increased to $2.32 billion in FY18 as compared to $2 billion reported in FY17. The profit repatriation by different sectors and companies are lower than the FDI received by the companies in FY18, standing at $2.76 billion.
The increase in the pace of profit repatriation is due to the stability in the business climate of the domestic market despite a few major challenges to the economy. Improvement in the security situation and local consumption stirred up growth in economic activities. As a result, the revenue streams of multinational and local companies have also settled on the track of growth.
Higher prospects of profit earning and repatriation will not only increase the inducement of investment from existing foreign companies but will also attract new players in the local market in coming years, especially in the context of China Pakistan Economic Corridor (CPEC).