Pakistan has approved the repatriation of Rs. 600 million to a foreign firm after a decade of legal proceedings.
The Finance Division requested the Cabinet on 6 July to repatriate the funds that are due to the US insurance company, MetLife Inc, reported a national daily.
MetLife acquired the American Life Insurance Company (Alico) in 2010 and decided to sell Alico’s 81 percent shareholding in its subsidiary, Alico Pakistan. It completed the sale in two tranches — one in 2014 and the other in 2015.
MetLife filed a request with the State Bank of Pakistan to repatriate the proceeds of the sale.
The State Bank of Pakistan has allowed only a quarter of the funds to be transferred to MetLife because the Finance Division had issued a letter saying that capital issued by an insurance company is not allowed to be repatriated as per the Insurance Act.
However, the Securities and Exchange Commission of Pakistan had told MetLife in 2013 that there is no bar on the repatriation of foreign investment made in locally listed companies. Still, the approval ultimately depended on the Finance Division’s decision.
The Finance Division responded that the Department of Insurance of the Ministry of Commerce had specified the bar on repatriation in letters issued in 1995.
The US government had discussed the matter during a meeting on the Trade and Investment Framework Agreement in May 2019, and has raised the issue in almost every bilateral meeting with Pakistan since then.
The Finance Division finally passed a final decision after an inter-ministerial meeting on 6 July this year, stating that the Economic Coordination Committee and the relevant laws do not bar the repatriation of disinvestment proceeds.
Subsequently, the division asked the federal Cabinet to approve the transfer of the remaining funds to MetLife.