Pakistan’s Investment Crisis Worsens, SIFC Struggles To Attract Investors Despite Big Promises

Karachi: Pakistan’s investment situation is becoming more worrying, as new data shows the country is still failing to attract enough local and foreign investment. Despite several government initiatives, investor confidence remains low and capital inflows are weak.

Pakistan’s investment-to-GDP ratio is stuck at around 13.1 percent. This is far below the regional average of more than 30 per cent. In neighbouring countries, higher investment has helped improve growth, jobs, and overall economic strength. In Pakistan’s case, experts say the low ratio reflects deep and long-standing structural problems rather than short-term economic issues.

High hopes from SIFC fade

Two years ago, the government launched the Special Investment Facilitation Council (SIFC) to fix these problems. The SIFC was designed to fast-track big investment projects and reduce bureaucratic delays. It was backed by both civilian and military leadership and was promoted as a powerful tool to revive the economy by attracting foreign capital.

However, two years later, the results have been disappointing. Despite strong backing and wide authority, the SIFC has failed to bring in major new investments. While there have been many meetings, roadshows and announcements, most proposed projects have not moved beyond the discussion stage.

Investor confidence has not improved in any meaningful way, and foreign investment remains limited. Even within government circles, there is now a quiet admission that the SIFC has not delivered what it promised.

Focus shifts to domestic investors

Recently, at a Pakistan Business Council event in Islamabad, the SIFC’s national coordinator admitted that foreign investors will not come unless local investors feel confident first. He suggested that the government may now focus on supporting large domestic business groups to revive confidence.

While this shift may sound practical, economists remain sceptical. They argue that favouring a small group of powerful businesses does not solve the real problem.

Structural issues remain unresolved

Analysts say Pakistan’s economy has long suffered from an uneven business environment. Well-connected companies often receive special incentives, tax relief and policy support, while smaller businesses face red tape, unstable taxes and frequent rule changes.

Critics believe the SIFC has strengthened this unequal system by creating a parallel decision-making channel instead of fixing existing institutions. Without broader reforms, they warn, Pakistan’s investment crisis is unlikely to ease anytime soon.