Business leaders warn of foreign company exodus

Call for govt action as risks to foreign investment, economic stability grow

KARACHI:

Business leaders have raised alarms, urging the government to take serious notice of the exodus of multinational enterprises (MNEs) from Pakistan. They expressed concerns that this trend is leaving both workers and highly skilled professionals unemployed, while foreign and local investors are growing increasingly wary of the country's economic environment.

Majyd Aziz, former president of the Karachi Chamber of Commerce and Industry (KCCI) and a prominent business figure, emphasised that the departure of MNEs and the relocation of local companies' back offices abroad is a significant issue. "It seems policymakers have buried their heads in the sand, or government spin doctors have been instructed to avoid discussing this to prevent media hype.

A formal response to this exodus would reveal that investor confidence is at an all-time low," Aziz remarked.

He warned that official acknowledgment of long-established foreign companies exiting Pakistan would deter potential investors, who may reconsider bringing foreign direct investment (FDI) into the country. "This situation could hinder the Special Investment Facilitation Council's (SIFC) efforts to attract FDI.

In the coming years, only the boldest foreign investors may risk investing in Pakistan," Aziz added.

Aziz cautioned the government against downplaying the exodus of foreign-owned companies, noting that some so-called 'experts' have claimed new companies are registering with the Securities and Exchange Commission of Pakistan (SECP) to counter the exodus narrative. However, many of these new registrations are merely extensions of already established corporations.

The government should prioritise attracting foreign investors who not only bring in foreign exchange but also create jobs. Outsourcing strategic assets without adding jobs is just another way to secure foreign currency. Economic diplomacy must be pursued with greater passion and pragmatism.

Foreign companies in Pakistan face significant challenges in remitting dividends, royalties, and technical fees. It is high time for the State Bank of Pakistan (SBP) to develop a mechanism to address these issues promptly.

Lahore-based entrepreneur Hasan Shahid highlighted the difficulties foreign IT companies face, citing a UK-based tech company that expanded its operations in Pakistan last year, hiring 250 skilled professionals, only to suddenly shut down its business.