Telecom sector made the highest repatriation of profit in Pakistan in the financial year 2018-19.
According to the State Bank of Pakistan (SBP), the telecom operators carried out profit repatriation of $305 million in the financial year 2018-19. Withholding tax and services charges of the cellular phone remained suspended on the directives of Supreme Court of Pakistan for nearly nine months. During the period, the utility of the cellular phone services recorded handsome growth.
The profit repatriation of telecom operators has declined by nearly 7 percent from the previous financial year, which stood at $327 million. However, the companies remained resilient and the expansion and dividends repatriation of this sector stands positive.
It is imperative to mention here that telecom operators not only repatriated profits to their headquarters but the also made FDI of $286 million in the said period.
The profitability of the telecom sector is evident as PTCL and Jazz, the two leading telecom giants, showed double-digit growth in their revenue earnings during the said period. Microfinance banks owned by these companies also performed well to contribute to the balance sheet of their respective parent companies.
Telecom sector is followed by financial sectors, mainly foreign companies and foreign shareholders in private companies, including banks and financial service providing companies, with $273 million during the same financial year.
Foreign banks include Standard Chartered Pakistan, Bank of China, Dubai Islamic Bank, Samba Bank and etc.
The third sector with high-profit repatriation from Pakistan is Oil and Gas Exploration and Production. Companies under this sector repatriated over $258 million in the financial year 2018-19 mainly due to the high oil prices in the international market which formulated their revenue generation patterns in Pakistan.
Some of these companies are OMV from Austria, Eni Pakistan from Italy, Polish Oil and Gas, a company from Poland and etc.
Profit Repatriation Drops by 21% in FY19
The profit repatriation of foreign companies and foreign investors to their headquarters and homelands from Pakistan dropped by 21 percent in the financial year 2018-19.
According to SBP’s data, the dividends sent by different sectors reduced to $1.825 billion in FY19 from $2.32 billion recorded in FY18, showing a decline of nearly half a billion dollars or $495 million to the exact.
The depreciation of Rupee against Dollar was the major issue squeezing the profit repatriation of foreign and multinational companies during the said period. Besides, increased inflation pushed up their cost of operations in the country which adversely impacted on their balance sheet, profitability and profit repatriation.