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Pakistan Faces 'Investment Emergency' as Multinationals Flee High Costs

A report declares Pakistan is in an 'investment emergency' due to skyrocketing business costs and policy ad-hocism. The cost of doing business is 34% higher than regional neighbors, crippling industries with exorbitant energy prices and illogical taxation. Major multinational companies, including Procter & Gamble, Shell, and Microsoft, have exited, citing an unconducive environment and excessive taxation. With exports stagnant since 2022 and no promising investors on the horizon, a rescue strategy is deemed indispensable to save Pakistani industry.

Key Points: Pakistan's Investment Emergency: Exports Stagnate, Firms Exit

  • Business costs 34% higher than neighbors
  • Exports stagnant since 2022
  • Multinationals exiting due to high taxes, energy
  • Political instability, poor law and order cited
  • Electricity soars to Rs 56 per unit
2 min read

Pakistan going through an 'investment emergency': Report

Report reveals Pakistan's investment crisis: high business costs, fleeing multinationals, and stagnant exports cripple the economy.

"This pushes the entire gamut of the economy on a slippery note - The Express Tribune"

New Delhi, Jan 25

With exports stagnating and cost of doing business skyrocketing, Pakistan is going through an 'investment emergency' amid ad-hocism and a lack of transparency in policy affairs, a new report has revealed.

According to the Federation of Pakistan Chambers of Commerce and Industry, the cost of doing business in Pakistan is 34 per cent higher than that of its neighbours and regional states.

"This pushes the entire gamut of the economy on a slippery note as industries, entrepreneurs and start-ups struggle to stay afloat, having been cowed down at the hands of exorbitant energy prices, illogical and lopsided taxation and an uncertain exchange rate," argues The Express Tribune.

FDIs are on a downturn, and no promising investor is taking Pakistan's route.

Several big-ticket businesses have called it a day, "complaining of a lack of a conducive environment, harassment on the part of taxation officials, pestering political instability and poor law and order," the report mentions.

Moreover, Pakistani products are uncompetitive in international markets, and the slump in exports is one of the main reasons behind the economy not taking off.

Electricity has soared to Rs 56 per unit and oil and gas are being imported at a skyrocketing dollar-rupee parity.

Exports have stagnated since 2022 despite global trade recovery in several sectors.

A rescue and rehabilitation strategy is indispensable to save the industry from extinction, said the report.

The recent admission by Pakistan Finance Minister Muhammad Aurangzeb that some multinational companies have left the country due to 'high taxes and energy costs' has proved that doing business there is becoming extremely difficult for global firms.

In the recent past, apart from big companies like Procter & Gamble, Eli Lilly, Shell, Microsoft, Uber and Yamaha, scores of companies shifted their offices from Pakistan to Gulf countries and other destinations "in the face of excessive taxation". Telenor Group has also finally exit Pakistan.

Qatar-based Al Thani Group was the latest among a string of foreign companies to pull out of Pakistan because of the economic uncertainty and political turmoil in the country.

- IANS

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Reader Comments

S
Sarah B
The exodus of major companies like Shell and Microsoft is a huge red flag for any potential investor. It's sad to see the economic potential of the region being held back. A stable Pakistan is actually better for trade and the whole subcontinent's growth. 🤝
V
Vikram M
Rs 56 per unit for electricity! That's astronomical. Our industries would shut down overnight with those costs. It shows how crucial reliable and affordable energy is for 'Make in India' to succeed. Their loss could be our gain if we play our cards right and attract those displaced investments.
P
Priya S
The report mentions "harassment by taxation officials" – this is a critical point. Ease of doing business isn't just about laws on paper, it's about implementation on the ground. We in India must also ensure our tax authorities are facilitators, not harassers, to avoid such a scenario.
R
Rohit P
When big names like P&G and Yamaha pack up, it sends a terrible signal. Their common people will suffer the most from job losses and inflation. No politics here, just basic economics – you need trust and stability for money to come in. Hope they sort it out soon.
M
Michael C
Reading this as an expat in India. The contrast in business sentiment is stark. While challenges exist everywhere, the consistent narrative of policy uncertainty there is a killer. FDI is like water – it flows to the path of least resistance and stability.

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