Pakistan moves to halt Sweden investment treaty exit

The federal government has launched an inquiry into the decision to issue a termination notice for Pakistan’s

The federal government has launched an inquiry into the decision to issue a termination notice for Pakistan’s Bilateral Investment Treaty (BIT) with Sweden, amid concerns that ending the agreement could discourage foreign investment.

The decision was discussed at a recent federal cabinet meeting, where members expressed concern over the potential economic and diplomatic consequences of terminating the treaty, originally signed in 1981.

The cabinet decided that the termination notice should be withdrawn before it takes effect on September 29, 2026. It also approved opening negotiations with Sweden to update the agreement in line with Pakistan’s current investment policies and international practices.

A committee headed by Commerce Minister Jam Kamal Khan has been constituted to investigate why the termination notice was issued, what grounds were considered and which authorities approved the decision.

Cabinet members stressed that investment treaties should not be terminated without a detailed assessment of their economic and legal implications. They warned that an abrupt decision could affect Pakistan’s investment relationship not only with Sweden but potentially with other countries as well.

Prime Minister Shehbaz Sharif endorsed the cabinet’s concerns and directed the committee to establish clear procedures for reviewing and approving any future decision involving the termination of investment treaties.

The premier also referred to ongoing efforts to restructure and strengthen the Board of Investment (BOI). He said the Special Investment Facilitation Council and BOI had already been tasked with preparing a comprehensive reform plan, including the recruitment of experts specialising in investment agreements and international treaties.

The plan is expected to be submitted for approval within two weeks and is aimed at improving Pakistan’s ability to attract foreign investment.

The cabinet also formally constituted a Committee on Bilateral Investment Treaties under the Rules of Business, 1973.

The committee has been tasked with reviewing the consequences of Pakistan’s decision to terminate BITs with 25 countries under the country’s 2021 BIT strategy. It will assess whether the strategy and the Pakistan Model BIT Template 2021 remain suitable amid changing global economic conditions.

The committee will also work on a revised BIT policy covering key areas such as investment protection, most-favoured-nation treatment, fair and equitable treatment and mechanisms for resolving investment disputes.

The government’s move reflects growing concern over ensuring that Pakistan’s investment agreements support long-term economic interests while providing sufficient protection to both foreign investors and the country.