Why are multinationals exiting Pakistan?

Ammar H. Khan

Article Type

Article

Description

Pakistan has witnessed a notable exodus of multinational corporations (MNCs) in recent years, including giants like Procter & Gamble, Shell, and Eli Lilly, due to a combination of global shifts in business strategies and a challenging domestic economic and regulatory environment. Factors such as low investment-to-GDP ratios, a consumption-driven economy, declining real incomes, and excessive reliance on foreign direct investment (FDI) have undermined productive capacity. Coupled with regressive taxation, high compliance costs, price-fixing, and a thriving informal economy, MNCs find it increasingly unprofitable to operate formally, leading many to scale down or exit.

The paper argues that sustainable economic reform requires a focus on domestic investment, reduction of corporate taxes, formalisation of the economy, and the creation of an enabling environment for competition. Instead of courting foreign investors with guarantees, Pakistan must first mobilise domestic savings, incentivise risk-taking, and allow market forces to operate efficiently. Addressing these structural distortions is essential to retain MNCs, boost production, and develop a resilient economy that can generate higher incomes, productive employment, and long-term growth.

Publication Source

DAWN

Publication Date

10-19-2025

Pages

2

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