PAKISTAN’S economy continues to exhibit remarkable resilience, defying expectations of decline and highlighting untapped potential. With a population surpassing 225 million—64% of whom are youth—the country’s demographic dividend, coupled with abundant natural resources and a strategic geopolitical location, bolsters its ability to withstand external destabilization. As of 2024, the labor force stands at 72 million, with youth forming a significant proportion.
However, as author Michael Lewis observed, “Every form of strength is also a weakness,” emphasizing the need for Pakistan to channel its strengths productively. Our strengths, such as youth, Gwadar, atomic power and a number of natural resources, have become our weaknesses, rather we have created them due to a high level of polarization in all manifestations. Yielding to self-pity, the nation must harness its potential to foster growth and opportunity. Despite challenges, Pakistan remains an appealing destination for foreign investors. What does not transpire with Pakistan but still moves forward?
We need to stop blaming and contributing to what is not possible without self-accountability. $150 billion in external debt is not a big figure for the 5th largest nation, blessed with plenty of natural and human resources. The stats below give enough reason to be optimistic. I foresee the economic revival of the country, however, with compromised civil rights for which we are also responsible to some extent. Foreign investment in Pakistan has historically been modest, except for significant contributions from China, particularly under the China-Pakistan Economic Corridor (CPEC). In the past decade, total foreign direct investment (FDI) has hovered around USD 1.5 billion annually, with a notable spike during the implementation of CPEC projects. Effective governance could further enhance the country’s capacity to address external debt while capitalizing on its strategic location. Recognizing Pakistan’s importance, global powers such as China, Russia and the United States regard its involvement as critical to initiatives like the Belt and Road Initiative (BRI).
Pakistan is becoming increasingly attractive to foreign enterprises, offering a diverse market characterized by a growing consumer base (the middle class is expected to expand to 80 million by 2025), competitive labor costs (the average wage in manufacturing is around USD 150 per month) and strategic access to global trade routes. The presence of international corporations signals rising economic confidence. As Pakistan focuses on what lies within its control, it has the potential to overcome challenges and create a more favorable investment climate.
Multinational corporations are advancing both conventional and renewable energy in Pakistan. Shell Pakistan leads in fuel, while China Petroleum Pipeline Engineering invests over USD 2 billion in CPEC pipeline projects. Engro Energy’s partnerships with General Electric enhance power generation, addressing rising national demand. The telecom sector has also seen significant foreign investment, with Telenor, Jazz and Zong driving innovation and connectivity. Mobile phone penetration exceeds 70%, with over 150 million users. These contributions from international companies are key in driving energy, telecom and infrastructure growth in Pakistan, strengthening the economy.
The automotive sector benefits from global players such as Toyota Indus Motors, Honda Atlas and Suzuki Pakistan, with total automobile production in Pakistan rising by 13% in 2023, amounting to 250,000 vehicles. Hyundai Nishat Motors, in partnership with the Nishat Group, is introducing South Korean expertise and plans to scale production further. Consumer goods are dominated by global giants like Unilever, Procter & Gamble and Nestlé, which cater to the diverse needs of Pakistan’s growing population.
International pharmaceutical companies, including GSK Pakistan, Sanofi and Pfizer, play a pivotal role in enhancing healthcare infrastructure and addressing regional health challenges. Pharmaceutical exports, for example, increased by 10% in 2023, underscoring the sector’s growing significance. Meanwhile, the IT sector has emerged as a cornerstone of foreign investment, with global technology leaders such as IBM, Microsoft and Oracle advancing Pakistan’s digital transformation, supported by rising IT exports, which exceeded USD 2 billion in 2023.
CPEC has spurred over USD 6 billion in infrastructure investments, with companies like China State Construction Engineering Corporation (CSCEC) and Daewoo Engineering leading urban and transportation projects. Foreign banks such as Standard Chartered, Deutsche Bank and HSBC play a crucial role in Pakistan’s financial sector. Multinational firms like Bayer and BASF, alongside Engro Fertilizers, drive agricultural and chemical innovation. Global logistics leaders Maersk and DHL support trade, while retail giants Metro Cash & Carry and Carrefour modernize the consumer market. E-commerce, led by Daraz.pk, is transforming shopping trends, with online retail sales projected to grow by 18% annually.
Foreign investments in Pakistan span multiple regions, with substantial contributions from China, Europe, the United States, Japan and the Middle East. Chinese investments, particularly under CPEC, dominate in energy, telecommunications and infrastructure, comprising over 55% of total foreign investment inflows. European companies lead in consumer goods and pharmaceuticals, while the US and Japanese corporations focus on healthcare and automotive advancements. Middle Eastern firms, including Carrefour, are enhancing retail and real estate to cater to urban growth.
Pakistan’s economy remains resilient despite challenges like a $150 billion external debt and internal polarization. With a population of 225 million, abundant resources and a strategic location, the country offers vast potential. Foreign investments, particularly through CPEC, have spurred growth in sectors like energy, IT and infrastructure. The expanding middle class and competitive labour costs make Pakistan an attractive destination for investment. However, addressing governance issues and civil rights is essential to unlocking further growth. As multinational corporations continue to invest, Pakistan’s evolving investment landscape presents opportunities, provided internal challenges are addressed.
—The writer is Secretary General ICCI.
(tmalahore@gmail.com)
