An Essay on Why Multinational Corporations are Leaving Pakistan

This study explores the underlying factors behind the exit of multinational corporations (MNCs) from Pakistan and examines how macroeconomic volatility, regulatory uncertainty, and changing global corporate strategies influence this trend. Using firm-level data from the PSX and official statistics from the SBP, PBS, and the IMF, the analysis shows that, unlike in earlier decades, MNCs’ profitability across various sectors has remained modest, as the Pakistani economy continues to face sluggish aggregate demand and weak overall growth.
This essay highlights that incompetence and the opacity of investment agreements, along with the absence of an industrial policy, tax holidays, limited innovation, outdated administrative controls, unrestricted repatriation rights, and the lack of obligation on investors to provide essential training to the Pakistani workforce or the absence of technology transfer programmes and a broader R&D culture, have restricted public oversight and accountability. Additionally, they have kept both domestic and foreign firms in low productivity cycles. Weak governance, fragmented regulatory systems, and the lack of approved manufacturing facilities have further hindered the ability of local industries to access multiple export markets. In contrast, countries such as India, Vietnam, and Malaysia have utilised policy stability and technology-linked incentives to attract and retain high-value FDI.
The findings of this essay highlight that over the years, MNCs’ profit repatriations, however, often exceeded new inflows. Pakistan’s FDI inflows and investment have stagnated and remain below regional peers like Vietnam and Bangladesh. Many MNCs continued to treat Pakistan as a consumption-based market rather than a production hub.
The study suggests that Pakistan requires an ecosystem that supports business growth, meets local demand, and enables exports abroad. Improving productivity is central to achieving sustainable growth in Pakistan. One of the quickest and most secure ways to reach this objective is to integrate Pakistan into global value chains and marketplaces.