Pakistan must fix barriers to investment

October 30, 2026

Pakistan is trying to attract foreign investment, but high energy prices, expensive loans, complicated regulations, tax notices and competition from smuggled goods continue to create problems for businesses. The government cannot attract investors through announcements alone. It must also create conditions in which businesses can operate, grow and earn reasonable profits.

The Special Investment Facilitation Council (SIFC) has reported a pipeline of around 38 projects worth approximately $40 billion. These projects cover mining, industry, transport, energy, information technology, health, tourism and other sectors. However, a pipeline of proposed projects does not mean that the money has already been invested.

During a Senate committee meeting, officials also discussed five refinery agreements involving proposed investments of around $6 billion. They said the council was working with investors from China, Qatar and Kuwait to encourage investment and make government procedures easier.

These efforts are important, but the real test is whether they lead to actual investment. Investors look beyond government promises. They consider the cost of electricity, access to financing, tax policies, legal requirements and the ease of transferring profits. If these conditions remain difficult, investors may choose other countries.

Senators raised serious concerns about the high cost of doing business in Pakistan. They also questioned the delays caused by government departments and the burden of repeated tax notices. Such problems affect existing businesses as well as those considering new investments.

The government must therefore move beyond investment promotion and address the weaknesses of the business environment. Energy prices need to become more competitive, regulations must be simplified, and tax rules should be clear and predictable. Smuggling must also be controlled so that legal businesses are not forced to compete with cheaper illegal goods.

The SIFC can help coordinate government departments and reduce delays, but it cannot solve every economic problem through administrative measures alone. Lasting improvement requires consistent policies and cooperation among the government, the State Bank and relevant institutions.