High energy costs, taxes and smuggled goods threaten investor confidence, Senate told

Pakistan’s investment drive faces major challenges from high energy prices, expensive financing, tax notices, complex regulations

Islamabad:  Pakistan’s investment drive faces major challenges from high energy prices, expensive financing, tax notices, complex regulations and competition from smuggled goods, senators warned as the Special Investment Facilitation Council (SIFC) reported a pipeline of around 38 projects worth approximately $40 billion. The concerns raised during a Senate committee meeting highlighted the gap between attracting investment and creating conditions that allow businesses to operate and expand with confidence.

The Senate Standing Committee on Cabinet Secretariat, chaired by Senator Rana Mehmood ul Hassan, received a briefing from the Additional Secretary of SIFC and his team on the council’s performance and initiatives over the past three years. Officials said the project pipeline covered several sectors, including mining, industry, railways, roads, maritime affairs, power, information technology, pharmaceuticals, health, tourism and food security.

The briefing also highlighted the approval of the Brownfield Refinery Policy. According to officials, five refineries had signed implementation agreements involving proposed investments of approximately $6 billion. The agreements were presented as a major part of efforts to encourage investment in Pakistan’s refinery sector.

SIFC officials also discussed their engagement with Chinese companies and investors from Qatar and Kuwait. They said the council was working to attract foreign investment by making government procedures easier, improving visa facilities and providing single window services to help investors deal with different departments.

The committee chairman observed that obtaining no objection certificates, or NOCs, had previously been a major obstacle for investors. He said improvements had been seen following SIFC’s intervention but stressed that further work was needed to simplify procedures and reduce the burden of regulations on businesses.

Senator Saadia Abbasi questioned the effectiveness of the government’s efforts to attract foreign investors and said responsibility for bureaucratic delays ultimately rested with the leadership. She called for details of the actual incentives being offered to investors, stressing that efforts to attract investment should be supported by clear and practical measures.

Senator Mohammad Abdul Qadir drew attention to the high cost of doing business in Pakistan compared with other countries in the region. He identified energy and financing costs as major concerns for businesses and said multiple regulatory requirements and tax notices could create further difficulties for investors.

He also raised questions about the process for transferring profits out of Pakistan and the competition businesses face from smuggled goods. These problems, he said, could damage investor confidence and make it harder for local businesses to compete with companies operating in other regional economies.

The senator called for a coordinated relief mechanism involving the government and the State Bank of Pakistan. He said a structured approach was needed to improve the business environment, protect existing investments and encourage new investors to commit money to Pakistan.

The committee stressed that SIFC should continue helping investors navigate government procedures while working to improve Pakistan’s competitiveness. The discussion indicated that investment promotion requires more than announcing potential projects. Businesses also need clear rules, reasonable operating costs and confidence that their investments can generate returns under predictable conditions.

Officials also informed the committee that the regional situation had disrupted trade and business activity. Developments linked to the US Iran conflict had made it difficult to provide reliable statistical projections and final investment figures at that stage. The briefing did not provide a final confirmed investment total for the projects under discussion.

The $40 billion figure therefore represents the reported value of a pipeline of projects rather than confirmation that the entire amount has already been invested. Similarly, the approximately $6 billion linked to the five refinery agreements was presented as proposed investment, not as money already spent.

The meeting place SIFC’s reported progress alongside questions about the practical barriers facing investors. While the council said it was working to bring in investment and improve government coordination, senators pressed for stronger incentives, lower business costs and a more reliable system for dealing with regulatory and financial problems.