Multi-national companies working in Pakistan are facing difficulties inrepatriating their profits due to a shortage of dollars.
According to a report by the global news agency “Bloomberg,” due to thesevere shortage of dollars starting last year, nearly one to two billiondollars of profits from global companies, including Nestle, Unilever, andPhilip Morris, have been stuck in Pakistani banks.
The report reveals that Nestle, Unilever, and Philip Morris have been stuckin Pakistani banks for the past 18 months, with profits ranging from one totwo billion dollars.
Philip Goh, Vice President of the International Air TransportAssociation’s Asia-Pacific division, mentioned that while there has beensome improvement with expenditure of $470 million in August, foreigncompanies that wanted to send funds out of Pakistan at the beginning of thecurrent year have reduced their intentions.
He noted that withdrawing dollars from Pakistan is extremely challenging.According to the report, multinational companies need Auditor Certificatesto send funds out of the country, which means they have to go throughmonthly audits instead of annual ones. This leads to increased operatingexpenses in Pakistan and takes a considerable amount of time to complete.
It’s clear that this issue has been exacerbated by the country’s economicchallenges, including a decrease in the value of the rupee and risinginflation. The report also suggests that companies are trying to cope withthe situation by accessing banks that have dollars, investing in governmentsecurities, and relying on income from local operations.
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However, it remains to be seen whether these measures alone will encouragemultinational companies to stay in Pakistan. Furthermore, Dawn has reportedon Pakistan’s foreign exchange reserves, which had fallen to alarmingly lowlevels in July and August due to the massive drop in gold reserves.
This continuous decline in reserves was causing fluctuations in theexchange rate. By the start of September, the exchange rate had reached 307rupees against the dollar, but it has since improved and is showing signsof improvement, with a low-level increase of 7.5 percent in September, asreflected in the numbers.
At present, the country’s total foreign exchange reserves stand at $13.03billion, with $5.4 billion held by private banks. The report also mentionsthat the improvement in the value of the rupee and Pakistan’s growing urbanand youthful population are seen as hopeful signs for companies.