Pakistan Faces Deep Investment Crisis, High Costs & Policy Uncertainty Drive Investors Away

Pakistan is going through what business bodies are calling an “investment emergency”. A new report highlights that exports are stagnant, foreign investments are falling, and the cost of doing business has risen sharply. Frequent policy changes, lack of transparency and uncertainty are hurting investor confidence across sectors.

Cost of Doing Business Among Highest in Region

According to the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), the cost of doing business in Pakistan is 34 per cent higher than in neighbouring and regional countries. This makes it extremely difficult for industries, start-ups and small businesses to survive. High energy prices, uneven taxation and an unstable exchange rate have added to the pressure.

Energy Prices Hit Industry Hard

Energy costs are a major concern. Electricity prices have surged to Rs 56 per unit, while oil and gas imports have become more expensive due to a weak rupee. These high input costs have pushed production expenses up, making Pakistani goods less competitive in global markets.

Exports Stagnant Despite Global Recovery

Pakistan’s exports have remained flat since 2022, even as global trade has shown recovery in many sectors. Uncompetitive pricing, high production costs and policy uncertainty are key reasons behind the poor export performance. The slowdown in exports has weakened overall economic growth.

Foreign Investors Pulling Out

Foreign direct investment (FDI) is declining steadily. Many multinational companies have exited Pakistan, citing high taxes, costly energy, political instability and harassment by tax authorities. Companies such as Procter & Gamble, Shell, Eli Lilly, Microsoft, Uber, Yamaha, and Telenor Group have either scaled down or fully exited operations.

Government Admits Business Challenges

Pakistan’s Finance Minister Muhammad Aurangzeb recently acknowledged that several multinational companies have left the country due to high taxes and energy costs. Qatar-based Al Thani Group is among the latest foreign investors to exit, adding to concerns about Pakistan’s business climate.

Urgent Need for Economic Reforms

The report stresses that Pakistan urgently needs a rescue and rehabilitation plan to save its industrial base. Without stable policies, lower costs and investor-friendly reforms, the country risks further economic slowdown and loss of global business interest.