Why multinational corporations are leaving Pakistan

Several major multinational corporations have scaled back or exited Pakistan in recent years, according to a Board of Investment document seen by Nukta. The departures reflect a mix of domestic structural constraints, including currency volatility, regulatory complexity, and high operating costs, alongside broader global corporate restructuring trends.

Why are multinational corporations leaving Pakistan?

The presentation submitted at the Senate Standing on Planning Development & Special initiatives by Additional Secretary of Board of Investment stated that multinationals are leaving Pakistan due to macroeconomic instability, profit repatriation delays, and shrinking margins caused by high taxes and energy costs. Global restructuring is also a factor, with many firms shifting to asset-light, distributor-based models. The combination of local challenges and international pressures has made Pakistan an increasingly difficult environment for low-margin sectors.

What domestic factors are making operations difficult?

Pakistan's macroeconomic environment has placed significant pressure on foreign firms. Fluctuating exchange rates, persistent inflation, and balance of payments stress have eroded profitability, particularly for companies reliant on imported inputs. Delays in foreign exchange approvals and profit repatriation have added further operational risk.

Regulatory complexity compounds the problem. Businesses face unpredictable policy shifts, a heavy tax burden, and high logistics and energy costs. For consumer goods companies operating on thin margins, these conditions have made local manufacturing increasingly unviable.

Competition from the informal sector has further squeezed formal multinationals. Local companies operating outside the tax net can undercut on price, reducing the market share available to compliant foreign firms.

Which global companies have reduced their presence in Pakistan?

Several prominent global brands have either exited or restructured their Pakistan operations. Procter & Gamble, Shell, Microsoft, Pfizer, Sanofi, Uber, and Yamaha are among those that have reduced direct operations or shifted to third-party distribution models.

These exits span multiple sectors, from consumer goods and pharmaceuticals to technology and energy. While some decisions are company-specific, the pattern points to shared structural concerns about the Pakistani market.

Is foreign direct investment in Pakistan actually declining?

Despite the high-profile departures, Pakistan's broader FDI numbers tell a more nuanced story. According to the State Bank of Pakistan, net FDI rose 6.1 percent to 2.489 billion dollars in FY25, up from 2.347 billion dollars in FY24. Gross inflows increased more sharply, rising 35.2 percent to 4.280 billion dollars from 3.166 billion dollars the previous year.

China accounts for the dominant share of foreign investment, representing 67 percent of foreign companies operating in Pakistan. Afghanistan follows at 7 percent, with Canada at 3 percent, the United Kingdom and Germany each at 2 percent, and the United States at 1 percent. Spain, Saudi Arabia, Malaysia, Denmark, and others make up the remaining share.

What new investment is Pakistan attracting?

The government is actively courting new investors to offset corporate exits. Saudi Arabia's Aramco, the Wafi Group, US-based Nova Minerals, Mashreq Bank, Abu Dhabi Ports, and several other Middle Eastern firms have expressed interest in entering or expanding in Pakistan.

The Board of Investment and the Special Investment Facilitation Council are handling this push through distinct but complementary roles. The Board of Investment manages regulatory affairs, policy formulation, Special Economic Zones, Bilateral Investment Treaties, and business facilitation. The Special Investment Facilitation Council leads high-level diplomatic engagements, government-to-government deals, and long-term investor outreach.

What reforms is the government introducing to improve the investment climate?

The government has approved three reform packages comprising 465 regulatory changes under the Cabinet Committee on Regulatory Reforms. These measures are projected to reduce annual compliance costs for businesses by more than 250 billion Pakistani rupees.

Officials argue that these reforms, combined with growing competitiveness among local Pakistani industries, position the country to attract higher-quality investment. Whether that case proves convincing to multinationals evaluating Pakistan against regional alternatives remains to be seen.