The Saudi Al-Jomaih case is Pakistan’s FDI moment of truth

Pakistan stands at a critical inflection point in its economic journey. Our long-standing investment narrative is increasingly viewed as a test case for the country’s commitment to investor protection and economic diplomacy. A prolonged delay in resolving the governance and shareholding issues in K-Electric, despite repeated public assurances, is raising serious concerns about Pakistan’s ability to uphold its stated investment principles. If not addressed with urgency and clarity, the situation may have far-reaching consequences for investor sentiment, country risk perception, and the inflow of much-needed capital.

How do we expect investors to stay when the system appears to be pushing them away? At a time when nations across the globe are competing to attract capital, we risk undermining our own potential through policy inconsistency, regulatory inertia, and the gradual erosion of investor confidence. Instead of fostering stability and predictability, we have too often relied on short-term fixes, ad hoc decisions, and reactive governance.

Investors don’t fear risk; they fear unpredictability. And today, unpredictability has become the defining characteristic of our investment environment. This is not a mere administrative lapse; it reflects a structural dysfunction that could seriously damage Pakistan’s standing in the regional and global economic order.

My advocacy for deeper Saudi investment in Pakistan has always been principled and consistent. I have long highlighted the Kingdom’s immense potential as a strategic partner in reversing Pakistan’s economic course. However, Pakistan’s credibility as a dependable and responsive investment destination is now under intense scrutiny. A long-unresolved issue involving a highly respected Saudi business group, Al-Jomaih, has become symbolic of broader systemic shortcomings.

Foreign Direct Investment (FDI) remains one of the most effective instruments for reducing debt, decreasing reliance on international financial institutions, and fostering inclusive growth. For over two decades, Pakistan has projected itself as open to global capital. Yet today, our failure to conclusively resolve a single investor dispute threatens to invalidate that narrative entirely.

Pakistan’s net FDI has now dropped to just 0.5 percent of GDP, an alarming signal when compared to regional and global peers. India attracts over 2.07 percent of its GDP in FDI, Indonesia exceeds 4.31 percent, and the UAE brings in more than 9.96 percent. China stands at approximately 1.6 percent, Egypt at 11.7 percent, Saudi Arabia at 1.45 percent, Kazakhstan at 5.45 percent, Uzbekistan at 10.3 percent, and Azerbaijan at 9.48 percent. This wide gap reflects not only global investor trends but also the perception of Pakistan as a high-risk, low-return, unpredictable market. It is not a capital problem; it is a credibility problem.

In 2005, the Al-Jomaih Group, one of Saudi Arabia’s most respected and credible business houses, entered Pakistan as a long-term investor in K-Electric. The transaction was hailed as a hallmark of successful privatization and a vote of confidence in Pakistan’s openness to international investment. Alongside global partners, Al-Jomaih invested significantly in upgrading Karachi’s power infrastructure.

Two decades on, not a single dollar of profit has been repatriated. Despite a cumulative investment exceeding USD 4 billion, the shareholders have received no return. To compound the issue, continued bureaucratic gridlock and regulatory ambiguity now threaten an additional USD 2 billion in potential future investment.

It is important to reiterate that Al-Jomaih has fully complied with all applicable legal and regulatory frameworks. Yet, the company continues to face policy reversals, procedural hurdles, and a worrying lack of institutional responsiveness.

Saudi interest in Pakistan’s mineral wealth from Reko Diq to the Thar coal basin, coastal tourism, IT infrastructure and food security partnerships could all be jeopardized.

Muhammad Azfar Ahsan

Despite multiple commitments, a resolution remains elusive. What began as a company-level concern has now become a high-stakes litmus test of Pakistan’s overall investment climate.

Encouragingly, recent discussions with both civilian and military leadership indicate a new level of seriousness. It now appears that the Prime Minister is personally engaged and committed to addressing these concerns with the gravity they deserve. This development signals a hopeful turning point in Pakistan’s efforts to restore investor confidence.

Saudi Arabia is not just a traditional ally; it is one of Pakistan’s most pivotal economic partners. Under Vision 2030, the Kingdom is significantly expanding its global investment footprint. Pakistan continues to feature prominently as a potential destination. The opportunity spans energy, infrastructure, mining, agriculture, tourism, and technology.

But if we are unable to resolve a single legacy issue fairly and swiftly, the consequences will ripple far beyond one company or one sector. Saudi interest in Pakistan’s mineral wealth (from Reko Diq to the Thar coal basin), coastal tourism, IT infrastructure, and food security partnerships could all be jeopardized.

In global capital markets, perception is reality; even inaction sends a message. When long-standing investors receive no clarity, markets interpret it as a lack of institutional will or seriousness. Delays are no longer seen as neutral; they are interpreted as warning signs.

Investor confidence depends on three fundamentals: legal protection, policy continuity, and the ability to repatriate capital. When long-term investors face indefinite uncertainty, it inevitably raises concerns for new entrants.

This matter is no longer confined to economics; mishandling the concerns of a strategic partner like Saudi Arabia risks weakening Pakistan’s position within the Gulf Cooperation Council (GCC) and undermining our economic diplomacy. As countries like Egypt, Jordan, and even Ethiopia gain favor as preferred GCC investment destinations, Pakistan cannot afford to send mixed or confusing signals.

There is also a moral obligation, one rooted in principle and dignity. A partner that has shown belief, patience, and long-term commitment deserves fairness and responsiveness. When we treat such investors with indifference, we hurt not only our economy but also our national self-respect.

The time to act is now, not in weeks or months, but in days. A transparent, just, and expedited resolution is essential. The legitimate concerns of all stakeholders must be addressed in a spirit of mutual respect and long-term partnership. This case must not only be resolved; it must serve as a benchmark for how Pakistan engages with its investors in the future.

The Al-Jomaih case is no longer just a dispute. It is now a symbol of Pakistan’s investment intentions and institutional resolve.

– The writer is Pakistan’s former Minister for Investment and Chairman of the BoI. He is a change activist, political analyst, and entrepreneur. He can be reached on X (formerly Twitter) @MAzfarAhsan