- Pakistan needs stability, better regulations, skilled workforce and incentives to attract strong foreign investment
Recently, many multinational corporations (MNCs) are exiting Pakistan due to a combination of factors, including:
- Economic Instability: The country’s economic landscape is marred by high inflation, currency depreciation, and a lack of foreign exchange reserves.
- Regulatory Uncertainty: Frequent policy changes, bureaucratic hurdles, and unpredictable regulations are deterring investors.
- Political Turmoil: Pakistan’s political instability is making it challenging for businesses to operate.
- High Taxes: The tax environment is considered unfavorable, with high tax rates and complex procedures.
- Energy Crisis: Frequent power outages and high energy costs are affecting production.
- Security Concerns: Safety and security issues are also a major concern for MNCs.
Some notable companies that have exited Pakistan include:
- Shell Oil: Sold its 77.42% stake in Shell Pakistan to Saudi firm Wafi Energy.
- Telenor: Divested its local unit to Pakistan Telecommunication Company for $388 million.
- Procter & Gamble: Winding down manufacturing and commercial activities in Pakistan.
- Eli Lilly: Shut down manufacturing operations.
- Sanofi: Sold its stake in Sanofi-Aventis Pakistan Limited.
- Uber: Suspended ride-hailing services.
- Microsoft: Exited the market.
These exits are a significant blow to Pakistan’s economy, highlighting the need for reforms to attract and retain foreign investment. Attracting FDI (Foreign Direct Investment) to Pakistan requires a mix of strategies. Here are some ideas:
- Improve Business Environment: Streamline regulations, reduce bureaucracy, and make it easy for foreigners to set up businesses.
- Infrastructure Development: Invest in roads, ports, and energy projects to support businesses.
- Incentives: Offer tax breaks, subsidies, or other benefits to attract investors.
- Skilled Workforce: Develop a skilled and educated workforce to meet industry needs.
- Stability and Security: Ensure a stable political and security environment.
- Promote Tourism and Culture: Showcase Pakistan’s rich culture and tourism potential.
- Digital Pakistan: Improve digital infrastructure and promote e-governance.
- Special Economic Zones (SEZs) : Establish SEZs with attractive incentives and infrastructure.
Some sectors with potential for FDI in Pakistan include:
- Energy
- Infrastructure
- Manufacturing (textiles, automotive, etc.)
- IT and IT-enabled services
- Tourism
Pakistan received $2.457 billion in Foreign Direct Investment (FDI) during the fiscal year 2025, marking a 5% increase from the previous year. This growth is attributed to Chinese investments, which rose by 91% to $1.227 billion. The power industry led the way with $551 million in FDI, followed by financial services with $414 million.
Key FDI Contributors:
- China: $1.227 billion (50% of total FDI)
- Hong Kong: $155 million
- United Kingdom: $148 million
- Switzerland: $116 million
- France: $82 million
Sector-wise Breakdown:
- Power Industry: $551 million
- Financial Services: $414 million
- Oil and Gas Exploration: $187 million
- Electronics: $105 million
This surge in FDI is a positive sign for Pakistan’s economic growth, with the government implementing reforms to attract foreign investment.