Beyond Conferences and Promises

Pakistan has another investment summit, a new memorandum of understanding, and another multi-billion-dollar opportunity every few months. However, the development of investment conferences would not result in an economic revolution; if it did, Pakistan would already be a number one investment hotspot in Asia. And, unfortunately, the global capital isn’t just looking for opportunity; it’s looking for predictability, institutional capacity, and confidence.

The investment challenge is not limited to attracting investment to Pakistan; it is creating the environment that will make investment sustainable. According to the World Bank, in recent years, the net foreign direct investment (FDI) inflows in Pakistan have been less than 1 percent of the GDP, far below the level seen in other countries in the region, like Vietnam and Bangladesh. In 2024, Vietnam received around $38 billion in FDI commitments, with the manufacturing, electronics, and export sectors leading the way. Despite its own challenges in infrastructure and governance, Bangladesh has consistently been able to grow industrial exports and investments through continuity of policy and emphasis on export competitiveness.

When institutional indicators are looked at, the contrast is enhanced. Contract enforcement, regulatory consistency, tax administration, and the reliability of infrastructure have been areas of weakness for Pakistan in the past. Frequent overlapping approvals, uncertainty over taxation, foreign exchange restrictions, and inconsistent policy enforcement by the federal and provincial authorities are some of the difficulties that investors encounter when entering Pakistan. These structural tensions have a high cost and risk premium.

The industry has, on the other hand, evolved into a long-term state policy, not a one-off public relations campaign, all over the Gulf and Southeast Asia. The United Arab Emirates developed internationally competitive free zones, featuring streamlined business regulations, speedy regulatory processes, and dispute resolution systems. Saudi Arabia’s Vision 2030 initiative has been an amalgamation of infrastructure investment, institutional changes, regulatory reform, and aggressive economic diversification. Vietnam had a very stable export-led industrialization strategy for decades, while Bangladesh adopted an industrial clustering and labor-intensive approach, which allowed it........

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