Dollar-crisis: Foreign companies’ dividends get stuck

The distribution of Tk 2.2 billion dividends of three multinational companies, listed in the stock market, has got stuck due to the dollar crisis.

Despite trying for more than a year, the three companies, operating in Bangladesh, could not send the profit to the foreign owners.

Apart from these three companies, two other companies listed in the stock market could recently send Tk 8.16 billion to their foreign owners after a long time.

However, the remittance of large amounts of profits of several multinational companies, not listed at the share market, and foreign airlines that have been operating business in Bangladesh has also been stuck for a long time.

According to the latest calculations of the International Air Transport Association (IATA) published in June last year, US $214.1 million (Tk 23.55 billion) of foreign airlines are stuck in Bangladesh. A large part of this money is from the air ticket sales, which they are not able to remit to the parent company abroad.

It is learned that a large sum of profit of a leading multinational company, which is not listed in the stock market, has also been stuck for several years. The company failed to collect the dollar to send this profit abroad after trying several times.

Later, the company decided to keep the profits here in Bangladesh for the time being after talking with the foreign owners.

Wishing not to be named, an official of the company told Prothom Alo, “We have tried several times and failed, and now we have removed it from the priority list. We realised that this problem will not be solved until the dollar-crisis returns to normalcy.”

Although there is no difficulty in distributing the dividends among the domestic investors of the listed companies, problems have arisen in cases of sending the money to the foreign investors who own these companies.

According to the rules, the profit declared by the listed companies at the end of the financial year has to be distributed among the shareholders of the respective companies within the scheduled period. There is an obligation that this profit has to be distributed within 30 days of approval at the annual general meeting (AGM) of a company. The company deposits the shareholders’ dues at a separate account. Later the bank transfers the money to the investors’ accounts.

But several multinational companies could not remit the dividends to their overseas organisations due to the prolonged dollar crisis in Bangladesh. The money is now stuck in the country as the banks are unable to supply dollars.

If the profit remains stuck like this for years, it sends a negative message about the country to foreign investors, say analysts. This could affect foreign direct investment as well as foreign portfolio investment in the stock market, and the foreign investors could be discouraged from investing in this country.

Besides, if the profit sharing is withheld for a long time, its real beneficiaries suffer. Because, if money is depreciated at this time, their profit amount decreases.

Rupali Haque Chowdhury, a former president of Foreign Investors Chamber of Commerce and Industry (FICCI), a platform of the foreign companies operating in Bangladesh, however, thinks that the situation has significantly improved.

She told Prothom Alo that currently foreign companies are getting the opportunity to send the profit in instalments. Many are remitting the dividends to owners abroad in other currencies due to the unavailability of dollars. There is no problem with that.

According to financial reports from the capital market regulatory body, BSEC, and related companies, it is currently known that dividends totalling Tk 2.2 billion are stuck in the country. These dividends belong to three multinational companies: Berger Paints Bangladesh, Marico Bangladesh, and Reckitt Benckiser Bangladesh. Among them, Berger has the highest amount stuck, totalling Tk 1.36 billion, Marico's Tk 453.3 million, and Reckitt Benckiser's Tk 384.2 million.

When asked, the company secretary of Berger Paints Bangladesh, Khandkar Abu Zafar Siddiqui, told Prothom Alo that since the onset of the dollar crisis in the country in 2022, they have been encountering difficulties in remitting dividends to foreign owners. As a result, several dividends are being withheld.

The companies have submitted their dividend allocation reports to multiple regulatory bodies, including the Bangladesh Securities and Exchange Commission (BSEC) and the Dhaka Stock Exchange (DSE). Alongside these reports, the latest financial reports published by the companies indicate that these undistributed dividends are deemed unpayable. This information was obtained by reviewing reports received from various sources.

Additionally, the dividends worth 8.16 billion from Grameenphone and Robi Axiata, both listed in the stock market, were stuck in the country for an extended period due to the dollar crisis. Of this amount, Tk 5.35 billion belonged to Grameenphone and Tk 2.8 billion to Robi Axiata. Recently, these two companies have successfully remitted the dividend payments to their owners abroad.

However, in the latest financial reports published by the two companies at the end of last September, this amount was reflected as unpayable dividends.

Sharfuddin Ahmed Chowdhury, head of the communication department at Grameenphone, told Prothom Alo, "Due to the foreign exchange crisis, the dividends we announced for 2022 were delayed for foreign investors. Recently, we have successfully distributed this dividend amount.”

Among the 11 multinational companies listed in the Bangladesh stock market, five of them faced challenges in remitting dividends owed to their foreign owners last year. Typically, dividends of these foreign-owned companies are remitted in dollars by the companies.

Norway-based Telenor Mobile Communications owns 55.80 per cent of Grameenphone shares. 90 per cent of Robi Axiata shares are owned by Malaysia-based Aziata Investments (Labuan) Limited and Singapore-based Bharti International PET Limited. Berger Paints Bangladesh is 95 per cent owned by J&N Investments (Asia). Approximately 83 per cent of Reckitt Benckiser's shares are owned by the UK-based parent company. In addition, 90 per cent of Marico Bangladesh shares are owned by Marico Limited of India.

These foreign companies receive dividends annually, sharing in the company's profits. Given that a majority of these companies are under foreign ownership, a significant portion of declared dividends is directed to these overseas stakeholders.

Former chairman of the BSEC, Faruq Ahmed Siddiqui, while speaking to Prothom Alo, laid emphasis that the withholding of dividends from foreign companies conveys an unfavourable message to foreign investors regarding the country's investment climate. Such actions could potentially deter future foreign investors interested in direct or portfolio investments within the country.

*The report was originally published in the print edition of Prothom Alo and has been rewritten in English by Shameem Reza and Farjana Liakat