It was learned on Wednesday that the federal government has allowed export-oriented businesses to create branch offices abroad.
Sources suggested that during its last meeting, the Economic Coordination Committee adopted a policy on ‘Equity Investment Abroad by Citizens’ after which export-oriented companies can now create a subsidiary/branch office abroad.
The Finance Division proposed that exporters be authorized to send up to 10% of their average annual export earnings over the last three calendar years, or $100,000, whichever is greater, to create subsidiaries/branch offices abroad during the calendar year without the prior approval of the SBP.
“This establishment of branch offices/subsidiaries abroad will allow export-oriented companies to play a vital role in attracting more export orders, as international buyers prefer to deal with their country’s subsidiaries and representative offices,” it said.
Likewise, the forum approved the establishment by residents of holding companies abroad to collect money.
“In order to facilitate the raising of capital from abroad by resident companies, particularly venture capital and start-up companies, it is proposed that the structure of ‘holding company (holdco) and operating company (opco)’ may be introduced in the policy, whereby a resident opco may send up to $10,000 to incorporate holdco abroad without prior approval of the SBP,” the summary of the Finance Division said.
“This will enable companies, in particular fintech and start-up companies already operating in Pakistan, to channel foreign investment into the country by setting up foreign holding companies.”
In addition, the ECC has also allowed resident individuals to invest abroad.
“As per the existing policy, after approval of the SBP, resident individuals may invest in listed securities abroad,” the summary said. “It is proposed that authorized dealers (banks) may remit up to a maximum of $25,000 in a calendar year for the acquisition of listed securities abroad on behalf of resident individuals without SBP’s approval.”
