The Pakistan Business Council (PBC) has unveiled a series of targeted industrial policies aimed at addressing challenges in attracting Foreign Direct Investment (FDI) and fostering economic growth across critical sectors, including agriculture, tourism, textiles, manufacturing, and Information Technology (IT). These measures, outlined in the PBC’s report titled Efficient-Seeking FDI in Pakistan, focus on modernizing industries, enhancing competitiveness, and positioning Pakistan as an attractive hub for global and local investors.
To revitalize agriculture, the policies include offering long-term land leases to investors and establishing joint Research and Development (R&D) centers dedicated to crop improvement. Leveraging smart agriculture technologies such as the Internet of Things (IoT) and Artificial Intelligence (AI) is also emphasized to optimize productivity. Additionally, significant attention is given to building cold chain infrastructure to reduce post-harvest losses, a critical issue in the sector.
In the tourism sector, reforms aim to relax regulations within special tourism zones and foster Public-Private Partnerships (PPPs) to develop infrastructure. These efforts are bolstered by global marketing campaigns, streamlined visa processes, and the introduction of e-visas and visa-on-arrival facilities to attract international tourists.
The textile industry, a cornerstone of Pakistan’s economy, is set to benefit from policies promoting Special Economic Zones (SEZs), fostering collaborations with global brands, and offering subsidies for the acquisition of modern machinery. These initiatives are designed to shift the focus toward value-added production, enhancing exports and competitiveness in international markets.
Light manufacturing is another focus area, with strategies to provide tariff subsidies for automated systems, establish skill development centers, and attract FDI in automotive and Electric Vehicle (EV) manufacturing. These policies aim to drive innovation and efficiency in the sector while creating employment opportunities.
The IT sector is positioned as a critical driver of economic growth, with measures including corporate tax exemptions for technology parks, concessional loans, and simplified export procedures. Partnerships in emerging fields such as fintech, health tech, and edtech are also being encouraged to expand the sector’s global reach and impact.
While these initiatives offer significant potential, Pakistan’s FDI landscape faces longstanding challenges. Historically, FDI inflows have been concentrated in a limited number of sectors, such as FMCG and telecom, leaving critical industries like manufacturing and agriculture underfunded. Moreover, investments primarily originate from a small group of countries, exposing vulnerabilities in the event of shifting geopolitical or economic dynamics.
Policy instability and regulatory hurdles have further compounded the situation, driving multinational corporations (MNCs) in sectors such as oil, gas, and pharmaceuticals to scale back local operations or divest entirely. Additionally, many MNCs have transitioned from local production to imports, increasing foreign exchange outflows and reducing the domestic economic impact.
Government-to-government (G2G) investments, while a potential quick fix, often encounter delays, cost overruns, and transparency issues. Compounding these challenges, outflows from equity returns, royalties, and import costs frequently surpass FDI inflows, resulting in a net capital loss for the economy.
To overcome these barriers, the PBC emphasizes focusing on sectors with limited local investment or risk appetite, such as value-added mining, logistics, IT, tourism, and manufacturing. With the implementation of these targeted policies, Pakistan aims to create a more conducive environment for FDI, fostering sustainable economic growth and addressing critical development needs.