Foreign investors repatriate $2.305 billion in profits and dividends during FY2025 to 2026

Foreign investors repatriated around $2.305 billion in profits and dividends from Pakistan during the financial year 2025 to 2026,

Islamabad: Foreign investors repatriated around $2.305 billion in profits and dividends from Pakistan during the financial year 2025 to 2026, exceeding the country’s reported net foreign direct investment of $1.64 billion, according to a written reply submitted to the National Assembly. The government said the figures alone do not explain why new investment remained below profit outflows, while a separate assessment of the impact on foreign exchange reserves and the current account could not be confirmed by the Special Investment Facilitation Council.

The reply was submitted by the minister in charge of the SIFC Division in response to a question from Dr Mahreen Razzaq Bhutto. It said repatriation linked to direct investment stood at approximately $2.202 billion. A further $103.7 million was sent abroad in earnings linked to portfolio investment, bringing total profit and dividend repatriation to about $2.305 billion.

The government clarified that these payments represent earnings on existing investments and are not the same as foreign investors withdrawing their original investment capital. It also noted that profits sent abroad in a particular year can come from investments made over many previous years. Therefore, annual profit payments and net FDI are not directly comparable measures of current investment activity.

The sector wise figures show that manufacturing recorded the largest profit and dividend outflows, at $564.3 million. Financial and insurance activities followed with $537.4 million, while electricity, gas, steam and air conditioning supply accounted for $496.5 million.

Wholesale and retail trade recorded outflows of $211.6 million, information and communication $166.9 million, transportation and storage $162.1 million, and mining and quarrying $124.6 million. These sector figures cover profit and dividend remittances from both direct and portfolio investment.

Despite the difference between net FDI and profit outflows, the government said Pakistan continued to attract investment. Gross FDI inflows stood at $3.166 billion in FY2023 to 2024 and increased to $4.268 billion in FY2024 to 2025. Gross inflows reached $3.603 billion during July to April of FY2025 to 2026, while $705 million was recorded during July and August 2026.

Net FDI reached $402 million in August 2026, showing growth of 80 percent compared with the same month a year earlier and 77 percent compared with July. The reply attributed the increase to investment from China, Canada and the United Arab Emirates. Major recipient sectors included power, financial services, electronics and food.

To attract more foreign investment and encourage existing investors to reinvest profits, the government cited Pakistan Investment Policy 2023, which prioritises exports, higher value products, technology, stronger local supply chains and investment from a wider range of countries.

The government also pointed to investor support through the SIFC and Board of Investment, the development of Special Economic Zones, and business contacts with China, Turkiye, Qatar and Saudi Arabia. These efforts aim to resolve investment hurdles, support business expansion and attract more financing for industrial projects.

The reply also stressed that foreign investors are legally entitled to repatriate profits and dividends, subject to State Bank of Pakistan regulations and the Companies Act 2017. The State Bank’s Foreign Exchange Manual sets out procedures for profit transfers by branches and dividend payments to non residents. The government said predictable rules for these transfers can help build confidence among investors.

On the impact of profit outflows, the reply said the State Bank monitors investment income through balance of payments reporting and reviews external sector developments through its economic and monetary reports. However, it did not confirm that SIFC had conducted a separate, dedicated assessment of the effect of FY2025 to 2026 profit repatriation on foreign exchange reserves and the current account. The reply said confirmation and any quantified assessment should be obtained from the State Bank and Finance Division.

The government explained that dividends and distributed profits are recorded as payments in the current account, while direct investment transactions are recorded in the financial account. Such payments add to current account outflows, other things remaining equal, but their effect on foreign exchange reserves cannot be measured by simply subtracting them from net FDI. Exports, imports, workers’ remittances, borrowing, debt repayments, other capital flows and foreign exchange operations also affect reserves.

The reply said a full assessment should also consider the foreign exchange earned by foreign invested businesses, the goods they help produce locally and the imports they may replace. It argued that the sustainable way to manage profit outflows is to attract more productive, export focused investment and strengthen Pakistan’s foreign exchange earnings while honouring lawful returns to investors.