The great corporate exit

When a global consumer giant like Procter & Gamble (P&G) shuts down its local manufacturing in a country of 240 million consumers, it sends a message louder than any statistic: Pakistan is losing investor confidence. P&G's decision to exit manufacturing as part of its global restructuring strategy might sound routine, but in a market of this size, such moves reflect more on the host country's business environment than on corporate plans. In recent years, a steady stream of multinationals – Shell, Microsoft, Careem, Telenor, Uber and several pharmaceutical and energy firms – have either downsized or departed entirely. While corporate exits happen globally, the pace and scale of withdrawals from Pakistan reveal deeper structural flaws. Once viewed as a promising emerging market, Pakistan is increasingly seen as a high-risk, low-return destination.

The departure of these companies carries real consequences, such as loss of jobs, tax revenues and technology transfer, as well as the loss of local manufacturing erodes employment and supply-chain opportunities. Over time, this shrinks the industrial base and discourages future investment. The pattern spans sectors. Microsoft closed its office in 2025 after 25 years, while Careem suspended ride-hailing services, citing unsustainable conditions, and Telenor sold its Pakistan stakes. These departures signal a growing trust deficit between Pakistan and international investors. Macroeconomic instability, erratic policymaking and governance failures have made operations increasingly difficult. Since 2021, the rupee has lost over half its value, while inflation has averaged above 25%, wiping out profit margins for firms reliant on imported inputs. Taxation is another deterrent. With a corporate tax rate of 29% among the region's highest, plus an additional 10% super tax and 18% sales tax, Pakistan's fiscal framework discourages investment rather than incentivising it. Policy reversals, sudden import restrictions and arbitrary price controls create uncertainty that few multinationals can tolerate. Even exiting the market is complicated. Delayed profit repatriation, blocked remittances and prolonged liquidation procedures make leaving Pakistan a bureaucratic ordeal. As investors often note, "If it's hard to exit, it's harder to enter."

Undoubtedly, weak infrastructure and regulatory unpredictability deepen investor frustration. Power shortages inflate costs, while frequent internet disruptions undermine Pakistan's ambitions as a digital hub. The IT sector reportedly lost around $300 million in 2023 due to shutdowns.

Venture capital funding, once a bright spot, has collapsed from $355 million in 2022 to just $43 million in 2024. Meanwhile, thousands of Pakistani firms have re-registered in Dubai, drawn by lower taxes, smoother regulations and stable policies. As global companies consolidate into regional hubs, Pakistan's failure to compete for such roles is glaring.

Reversing this corporate flight requires real reform, not rhetoric. Profit repatriation and business closure processes must be transparent and time-bound, ideally completed within 90 days. The SBP should ensure predictable access to foreign exchange for legitimate corporate remittances.

Tax reform is critical. Gradually reducing corporate tax to 25% and harmonising sales tax at 15% would align Pakistan with regional peers. To safeguard the IT sector, the government should declare no-shutdown zones in technology parks and stabilise internet access. Offering return packages, tax holidays and regulatory fast-tracking for firms that relocated abroad could also help restore confidence.

The exodus of global firms is more than a business concern; it is a verdict on Pakistan's economic governance. Left unaddressed, it risks triggering wider disengagement by both foreign and domestic investors. Yet, the crisis also presents an opportunity. If Pakistan can restore predictability, ensure fair taxation and uphold investor rights, it can still reclaim credibility as an investment destination. The message must be clear: Pakistan is open for business, and this time, it must mean it. Fail to act now, and the "exit" signs flashing across corporate Pakistan could soon mark the fading of an economy once full of promise.