KARACHI: Pakistan’s foreign direct investment (FDI) witnessed a slump of 45% in the month of February, the central bank data showed, with the Overseas Investors Chambers of Commerce & Industry (OICCI) pointing to the reluctance of investors to park their money in a country where “policies remain mostly inconsistent and businesses over-regulated.”
Pakistan’s government is working hard to convince foreign countries, including China, Saudi Arabia and United Arab Emirates as well as multinational firms, to invest in its mineral, agriculture, information technology and other sectors under the banner of the Special Investment Facilitation Council (SIFC), a civil-military forum.
The South Asian country of more than 240 million people, however, could only attract $95 million FDI in February compared with $172 million in the same month last year, according to the State Bank of Pakistan (SBP) data. Pakistan’s total FDI inflows in the first eight months of this fiscal year (Jun. 2024-Feb. 2025) stood at $1.62 billion.
“We lack consistency in our policies. Though political uncertainty is also important, policies that keep facing sudden changes, matter more,” said M. Abdul Aleem, chief executive officer of the Overseas Investors Chambers of Commerce & Industry (OICCI), told Arab News.
The OICCI is the oldest chambers of South Asia which represents more than 200 multinational companies operating in Pakistan. Some of its prominent members include Citibank N.A., Coca-Cola Beverages Pakistan Ltd., Akzo Nobel Pakistan Ltd., Toyota’s Pakistan unit Indus Motor Company Ltd., Mitsubishi Motors Corporation and Maersk Pakistan (Pvt.) Ltd.
In the past decade, Aleem said, his chamber had reinvested more than $22 billion in Pakistan, compared with $19.8 billion the country attracted on account of FDI from new projects, including the China-Pakistan Economic Corridor (CPEC).
“About 100 billion rupees of tax refunds of our member companies are stuck (with the government),” said the OICCI official, who has an extensive portfolio of leadership positions in Exxon Chemicals, Engro Corporation and the British American Tobacco Group UK.
Pakistan saw the departure of some large multinational companies in recent years.
TotalEnergies sold its 50% shareholding in Total PARCO Pakistan Limited to commodities giant Gunvor Group last year in August, while Shell Petroleum Company Limited signed an agreement with Wafi Energy LLC of Saudi Arabia to sell its majority stake in the Pakistan business in Nov. 2023.
“You saw some oil companies leaving Pakistan recently. Shell left, Total Parco left. They left because of all these factors that kept building up for years,” Aleem said.
“Many pharmaceutical companies shrank their businesses in Pakistan after the government started controlling the prices of medicines,” he said, without naming the firms.
Aleem cited Pakistan’s recently introduced refinery policy as an example that was “hurting” investor sentiment as a sudden change in the relevant tax laws made the deal “unviable” for companies.
“The foreign investors look at all these things and get upset. Good or bad you make a policy at once and do not change it,” he explained.
Pakistan faces a balance of payment crisis time and again and should therefore incentivize exports-oriented businesses that could invest their money in the country and export what they produce, according to the OICCI official.
“IT was one such area where the potential was very high. But then you see what sort of problems the Internet speed is facing,” he said.
Pakistan, a country of over 240 million, has witnessed up to 40% drop in Internet speeds in the last few months, according to the Wireless and Internet Service Providers Association of Pakistan (WISPAP). The drop came as the government last year moved to implement a nationwide firewall to block malicious content and protect government networks from cyberattacks, with IT associations saying the slowdowns have resulted in significant losses.
The OICCI secretary general said the government should activate the Board of Investment (BoI) to facilitate foreign investors through a one-window operation.
“The SIFC must be doing a good job but it is the Board of Investment’s job. If a foreign investor would deal with the army what impression would he get,” he said.
Pakistan constituted the SIFC, a civil-military body, in June 2023 to attract international investment in agriculture, energy, livestock, tourism, mining and minerals, and other priority sectors, amid an economic meltdown. The South Asian country averted a default that year, thanks to a $3 billion International Monetary Fund (IMF) program, and is currently navigating a path to economic recovery under another $7 billion IMF bailout.
Last week, Pakistan’s finance adviser Khurram Schehzad said the government was actively working to attract efficient, export-driven FDI to strengthen Pakistan’s economic foundation. But the country’s volatile security situation and the cash-strapped government’s revision of mid-stream unilateral contracts are further deteriorating the situation.
Kaiser Bengali, a Karachi-based development economist, said the SIFC was an ad hoc body which was working without having any “constitutional basis.”
“It is here today, gone tomorrow. Investors need certainty,” he said.
Bengali said Pakistan’s macroeconomic framework over the last four decades was geared to promote wealth generation via speculation in the stock market, real estate and under-invoicing of imports, rather than investment in productive sectors like manufacturing.
“Thus, foreign funds flow as short-term portfolio investment,” he said. “Thus, there is little incentive for serious FDI.”
Pakistan foreign direct investment declined 45% in Feb year on year, data shows
https://arab.news/vqfyd
Pakistan foreign direct investment declined 45% in Feb year on year, data shows
- Pakistan received $95 million FDI inflows last month, compared to $172 million in Feb. 2024
- Overseas chamber says multinational companies leaving Pakistan due to ‘inconsistent policies’
Pakistan FY26 budget to continue fiscal consolidation, focus on IMF guidelines — analysis
- Islamabad is currently holding budget talks with the IMF, likely to conclude this week
- Government has committed to fiscal consolidation in FY26 budget to ensure debt sustainability
KARACHI: Pakistan will continue fiscal consolidation, focus on IMF guidelines and bring untaxed and low tax areas into the tax net as it announces its federal budget for fiscal year 2025-26 next month, a top Pakistani brokerage house said in a budget review.
Islamabad is currently holding budget talks with the IMF, which earlier this month approved a loan program review for Pakistan, unlocking a $1 billion payment which the State Bank of Pakistan said had been received. A fresh $1.4 billion loan was also approved under the IMF’s climate resilience fund.
“We expect this budget to continue fiscal consolidation, focus on IMF guidelines and bring untaxed/low tax areas in tax net,” Topline Securities said in a budget review.
The brokerage house said the government had committed with the IMF to continue with fiscal consolidation in the FY26 budget to ensure debt sustainability.
“The government targets primary surplus of 1.6 percent of GDP (vs. 2.0-2.1 percent of GDP in FY25), a surplus for the third consecutive year after two decades. The government has also committed to use any windfall dividend expected from the central bank over and above 1 percent of GDP to retire debt,” the review said.
The analysis predicted the Federal Board of Revenue’s FY26 tax revenue growth target could be the lowest in six years.
“FBR revenue target is expected at Rs14.1-14.3 trillion, up 16-18 percent YoY, which will be the lowest percent growth in the last 6 years,” it said.
The FBR has achieved a five-year revenue Compound Annual Growth Rate of 25 percent from FY21-25.
“We believe, out of this required 16-18 percent growth, approximately 12 percent would be achieved through autonomous growth driven by real GDP growth of 3.6 percent and inflation of 7.7 percent. The remaining 4-5 percent growth translates into additional tax measures of Rs500-600 billion,” the analysis estimated.
Revenue measures expected include a change in the GST calculation price of sugar, the likely introduction of taxes on pension, retailers and wholesalers and a likely increase in federal excise duty on cigarettes, fertilizer products and pesticides by 500bps. A tax on the income of freelancers, vloggers and YouTubers is also expected.
“Government is expected to announce some relief measures namely (1) extension in exemption limit on salary or reduction of tax rate by 2.5 percent for all salary brackets, (2) rationalization of duties on trade, (3) likely housing finance subsidy, (4) inflation adjustment in minimum salary and unconditional cash transfer, and (5) some rationalization in super tax,” the analysis said.
It said the government would reportedly set a GDP growth target of 3.5-4.5 percent “while we expect GDP growth target for FY26 at 3.5-4.0 percent led by services.”
The analysis predicted the budget was likely to be neutral for the stock market in the short-term, neutral to positive for cement, steel, oil and gas, consumers, and independent power producers, and neutral for oil marketing firms, IT, banks, pharma, autos and textile.
Pakistan’s 37-month $7 billion IMF loan program, approved on Sept. 25, 2024, aims to build resilience and enable sustainable growth. Key priorities include entrenching macroeconomic sustainability through implementation of sound macro policies, including rebuilding international reserve buffers and broadening of the tax base; advancing reforms to strengthen competition and raise productivity and competitiveness; reforming state-owned enterprises and improving public service provision and energy sector viability; and building climate resilience.
Highlighting progress in Pakistani policies to stabilize the economy, the IMF said earlier this month when it approved the latest tranche that Pakistan’s fiscal performance had been strong, with a primary surplus of 2.0 percent of GDP achieved in the first half of FY25, keeping Pakistan on track to meet the end-FY25 target of 2.1 percent of GDP.
“Inflation fell to a historic low of 0.3 percent in April, and progress on disinflation and steadier domestic and external conditions, have allowed the State Bank of Pakistan to cut the policy rate by a total of 1100 bps since June 2025,” the IMF added.
“Gross reserves stood at $10.3 billion at end-April, up from $9.4 billion in August 2024, and are projected to reach $13.9 billion by end-June 2025 and continue to be rebuilt over the medium term.”
Pakistan’s second biggest city Lahore sizzles amid scorching heatwave
- Met Office warns of heatwave from May 20-24, temperatures to be 4-6 degrees above average in three main provinces
- In June 2024, almost 700 people died in heatwave in less than a week, 2015 heatwave claimed over 2,000 lives in Karachi alone
LAHORE: Pakistan’s second biggest city, Lahore, sizzled under scorching heat this week as residents tried to stay hydrated in temperatures of 43 degrees Celsius (109 Fahrenheit).
The Pakistani Meteorological Office on Monday issued a heatwave alert saying temperatures would be four to six degrees above average in the Sindh, Punjab and Balochistan provinces from May 20-24.
The Met Office also advised people to avoid prolonged exposure to direct sunlight and stay hydrated.
“The heat is so intense in Lahore at the moment that it is difficult to go out. People should take caution, wear caps soaked in water, and they should drink plenty of water,” resident Wasif Khan said.
“They should use sunglasses. There are juice stalls at different places, they can consume that. Anyway, they should protect themselves from heat.”
Pakistan experiences a long and hot summer season.
“The work cannot stop. We have to carry out our work in any circumstances,” resident Mohammad Shehzad said as he poured a bottle of cold water on his head.
“I am drinking juices and trying to remain under shade to protect myself from the heat. You know, the work goes on whether it is intense heat or it is very cold.”
The current heatwave comes amid increasingly erratic climate patterns across South Asia, with cities in Pakistan experiencing more frequent and intense heat waves in recent years, a trend climate experts link to global warming and climate change.
A 2015 heatwave claimed over 2,000 lives in Karachi alone while floods in 2022 left more than 1,700 dead and over 33 million displaced nationwide.
In June 2024, almost 700 people died in a heat wave in less than a week, with most deaths recorded in the port city of Karachi and other cities of the southern province of Sindh, according to the Edhi Foundation charity.
PIA announces direct flights from Lahore to Paris from June 18
- PIA is already operating two weekly flights from Islamabad to Paris
- PIA resumed flights to Europe in January after 4.5-year-long ban
KARACHI: Pakistan International Airlines is launching direct flights from Lahore to Paris, with the first flight taking off on June 18, the national carrier said in a statement on Thursday.
PIA resumed flights to Europe in January after a four-and-a-half-year ban was lifted by EU regulators. A flight of the state-owned airline, plagued by a history of deadly crashes and a pilot license scandal, took off from Islamabad for Paris on Jan. 10, becoming the only carrier to offer a direct route to and from the European Union.
“PIA’s first flight from Lahore to Paris will take off on June 18,” the airline said. “A weekly flight from Lahore to Paris will take off directly on Wednesday.”
PIA is already operating two weekly flights from Islamabad to Paris and would “soon” launch flights to other cities in Europe, the airline said.
Debt-ridden PIA was banned in June 2020 from flying to the EU, United Kingdom and the United States, a month after one of its Airbus A-320s plunged into a neighborhood of Karachi, killing nearly 100 people.
The disaster was attributed to human error by the pilots and air traffic control, and was followed by allegations that nearly a third of the licenses for PIA pilots were fake or dubious.
On November 29, the European Union Aviation Safety Agency announced it had lifted the ban on EU flights.
PIA still remains barred from flying in the UK and the United States.
Sifting through the rubble of latest Pakistan-India conflict
- Clearance teams are combing through fields for unexploded shells so residents can safely build back from rubble of their homes
- Unexploded ordnance dating from conflicts past killed several children in 2021 and 2022 in Azad Kashmir
NEELUM VALLEY, Pakistan: Two weeks after Pakistan and India’s most intense military clashes in decades, clearance teams along the border comb through fields for unexploded shells so residents can safely build back from the rubble of their homes.
Around 70 people, mostly Pakistanis, were killed in the four-day conflict that spread beyond divided Kashmir, over which the neighbors have fought three major wars.
The military confrontation — involving intense tit-for-tat drone, missile, aerial combat and artillery exchanges — came to an abrupt end after US President Donald Trump announced a surprise ceasefire, which is still holding.
On the Pakistan side of Kashmir, called Azad Kashmir, 500 buildings were damaged or destroyed, including nearly 50 in the picturesque Neelum Valley, where two people were killed.
“There is a possibility that there are unexploded shells still embedded in the ground,” said local official Muhammad Kamran, who has been helping clear educational institutions near the border.
Unexploded ordnance dating from conflicts past killed several children in 2021 and 2022 in Azad Kashmir.
Headmaster Muhammad Zubair follows a mine detector into a classroom of his high school in the valley where a writing on a whiteboard standing in the debris reads “we are brave” in English.
“Although the fighting has stopped, people still hold so much fear and anxiety,” he told AFP.
“Despite calling them back to school, children are not showing up.”
Abdul Rasheed, a power department official, said he worked “day and night” to repair power lines damaged by Indian firing.
Over the years, investment in roads has helped to create a modest tourism sector in the Neelum Valley, attracting Pakistanis who come to marvel at the Himalayan mountains.
Hotels reopened on Monday, but they remain deserted in the middle of peak season.
Alif Jan, 76, who has lived through multiple clashes between the two sides, is yet to call her grandchildren back to her border village after sending them away during the latest hostilities.
“It was a very difficult time. It was like doomsday had arrived,” she said.
The children were sent to Azad Kashmir’s main city of Muzaffarabad, usually safe but this time targeted with an Indian air strike.
Jan wants to be certain the fighting doesn’t resume and that she has enough to feed them before they eventually return.
In a schoolyard, she collects a 20-kilogram (45-pound) bag of flour, a can of oil, and some medicine from a local NGO.
Thousands of other families are still waiting to be relocated or compensated for damage.
“We have identified 5,000 families,” said Fawad Aslam, the program manager of local aid group.
“Our first priority is families who suffered direct damage, while the second priority is those who were forced to migrate — people who had to leave their homes and are now living in camps or temporary shelters.”
For 25-year-old Numan Butt whose brother was killed by shrapnel, the aid is little consolation.
“This conflict keeps coming upon us; this oppression is ongoing,” he told AFP.
“It is a good thing that they have agreed to peace, but the brother I have lost will never come back.”
Pakistan will not get water over which India has rights, India PM Modi says
- India suspended the 1960 Indus Waters Treaty last month after a militant attack in Indian-administered Kashmir
- Pakistan has denied involvement and this month engaged in the worst military confrontation with India in decades
NEW DELHI: Pakistan will not get water from rivers over which India has rights, Indian Prime Minister Narendra Modi said on Thursday, a month after a deadly attack in Indian-administered Kashmir led New Delhi to suspend a key river water-sharing treaty between the neighbors.
The suspension of the Indus Waters Treaty, negotiated by the World Bank in 1960, was among a slew of measures announced by India against Pakistan last month after the April 22 attack that killed 26 men, mostly Hindu tourists.
New Delhi had said the attack was backed by Pakistan – an accusation Islamabad denied – and the nuclear-armed neighbors were involved in their worst military fighting in nearly three decades before agreeing to a ceasefire on May 10.
“Pakistan will have to pay a heavy price for every terrorist attack ... Pakistan’s army will pay it, Pakistan’s economy will pay it,” Modi said at a public event in the northwestern state of Rajasthan, which borders Pakistan.
The Indus treaty provides water for 80 percent of Pakistan’s farms from three rivers that flow from India but Pakistan’s finance minister said this month that its suspension was not going to have “any immediate impact.”
The ceasefire between the countries has largely held, with Indian Foreign Minister Subrahmanyam Jaishankar saying that there is no exchange of fire currently and “there has been some repositioning of forces accordingly.”
“If there are acts of the kind we saw on April 22, there will be a response, we will hit the terrorists,” Jaishankar told Dutch news outlet NOS.
“If the terrorists are in Pakistan, we will hit them where they are,” he added.
There was no immediate response from Pakistan to comments by Modi and Jaishankar.
India and Pakistan have shared a troubled relationship since they were carved out of British India in 1947, and have fought three wars, two of them over the Himalayan region of Kashmir, which they both claim in full but rule in part.
New Delhi also blames Pakistan for supporting Islamist separatists battling security forces in its part of Kashmir, but Islamabad denies the accusation.
The arch rivals have taken several measures against each other since the April attack in Kashmir, including suspension of trade, closure of land borders, and suspension of most visas.
