Multinational companies in Pakistan are unable to send their profits back home, with anywhere from $1 to $2 billion in earnings stuck in the country, according to a report in Bloomberg.
Quoting a Karachi-based chamber of commerce for multinationals, the report says that multinational companies like Nestle, Unilever, and Philip Morris have had their profits stuck in local banks in Pakistan for nearly 18 months.
The repatriation of profits and dividends by foreign investors declined by $1.349 billion or 80 percent to $331 million during the last fiscal year (FY23), the lowest level in eighteen years.
The massive depreciation of the Pakistani Rupee (PKR) in the last 18 months has further exacerbated problems as companies forced to keep profits in the country are losing money.
Quoting Unilever Pakistan’s Chief Financial Officer, the report said that the company has started discussions with local authorities regarding the issue of profit repatriation. The report said that Nestle Pakistan is also in contact with authorities regarding the situation.
However, the situation has improved in the current fiscal year (FY24), with the repatriation of profits and dividends by foreign investors on their investment in Pakistan seeing an increase of 74 percent during the first two months of FY24.
According to the State Bank of Pakistan (SBP) data, foreign investors repatriated profits and dividends of $49.2 million in the first two months of FY24, an increase of $21 million.
Despite the situation, the report quoted a spokesperson of Philip Morris (Pakistan) Ltd as saying that the company is hopeful that the situation will improve in the long term to win back the confidence of foreign investors in Pakistan.
