Over the last three years, Pakistan has witnessed an unsettling trend: multinational companies (MNCs) that once proudly invested in its growing market are packing up and leaving.
What was once seen as a promising frontier for global brands is now increasingly viewed as a difficult, high-risk and low-reward investment destination. The exit of companies like Procter & Gamble (P&G), Shell, Microsoft and Careem, alongside the pullback of pharmaceutical giants, paints a worrying picture of a country struggling to retain international business confidence. This wave of multinational divestments has broad implications not only for foreign direct investment (FDI) inflows but also for Pakistan’s reputation as a reliable business partner.
While corporate exits are a natural part of business cycles worldwide, the scale, frequency and clustered nature of departures in Pakistan point towards deeper structural issues. At a time when the global economy is rapidly reorganising into regional hubs and efficiency-driven value chains, Pakistan risks being left out if it fails to urgently address the systemic barriers pushing investors away.
For a country with a population of over 240 million where consumer demand for personal care products continues to rise the exit of a global household brand like P&G is a telling blow. Pharmaceutical companies have also been among the hardest hit. Danish drugmaker Lundbeck announced in 2025 that it would be leaving Pakistan as part of a broader pullback from 27 markets. But Pakistan has long been a difficult environment for pharma.
Technology and services have not been spared either. Microsoft, after 25 years of presence, shut down its local office in 2025, citing a global shift towards partner-led business models. While the company has not fully abandoned Pakistan, the closure of its direct office diminishes the country’s standing in the global IT ecosystem. Ride-hailing giant Careem once hailed as a tech success story in Pakistan suspended operations after nearly a decade, citing unsustainable conditions in an increasingly strained mobility sector. Energy and telecom have seen similar retrenchment. Shell Pakistan sold its 77.42 per cent stake in 2023 to Saudi Arabia’s Wafi Energy, while Telenor agreed to sell its Pakistan unit for approximately $490 million.
The reasons for these departures are not mysterious; they stem from a mix of macroeconomic instability, punitive taxation, regulatory bottlenecks and infrastructure shocks. Pakistan’s economy has been under severe stress, particularly since 2022. Foreign exchange shortages, rupee depreciation and record-high inflation have eroded profitability for MNCs. The rupee lost over 50 per cent of its value between 2021 and 2024, while inflation averaged above 25 per cent in 2023–24, making cost management a nightmare for international firms’ dependent on imports and raw materials.
Taxation is another key factor. Pakistan’s corporate tax rate currently stands at 29 per cent one of the highest in the region while sales tax is levied at 18 per cent and a ‘super tax’ of 10 per cent is applied on top for certain industries. Multinationals looking to maximize shareholder returns naturally choose jurisdictions with friendlier regimes. Pharmaceutical companies have long decried price controls and red tape. Getting an NOC for imports or product registration can take months if not years. Inconsistent government policies, frequent bans, sudden import restrictions or abrupt shifts in price caps create uncertainty that investors find intolerable.
Pakistan’s fragile infrastructure also plays a role. Frequent power shortages raise operational costs, while internet disruptions undermine IT and BPO exports. According to industry estimates, the 2023 internet shutdowns alone cost Pakistan’s IT sector nearly $300 million. In a globalised economy where digital exports are the fastest-growing segment, such instability is a direct deterrent.
The startup ecosystem, once booming, has also taken a hit. Pakistan attracted $355 million in startup funding in 2022, but by 2024 that figure had plummeted to just around $43 million a nearly 90 per cent collapse. Global venture capitalists now see Pakistan as too risky, preferring to invest in neighbouring markets like the UAE, Saudi Arabia and Egypt, which provide clearer regulatory frameworks and safer exit options. Perhaps the most telling statistic is that over 24,000 Pakistani firms re-registered in Dubai in the last 2.5 years. These are not just global companies, but local entrepreneurs and SMEs seeking stability, lower taxes and easier access to international markets.
It is also important to situate these exits within broader global trends. Multinationals have been consolidating operations into regional hubs rather than maintaining small-scale facilities in every market. For example, instead of producing in Pakistan, global pharma firms prefer to serve it through hubs in Dubai or Singapore, where economies of scale are higher and regulatory risks are lower. This is not unique to Pakistan companies worldwide are reevaluating footprints to cut costs and increase efficiency. However, the difference is that in other countries, governments actively compete to attract and retain headquarters and regional centres by simplifying regulations and offering incentives. Pakistan, in contrast, is losing not only global attention but also local participation in this global consolidation race.
Exits are not inherently negative; they are part of any investment cycle. But in Pakistan, the process of winding down operations is long, complicated and riddled with uncertainty. Companies have reported blocked remittances, endless clearance requirements, and unpredictable delays. In contrast, liquidation in the UAE takes roughly 45–90 days, while in Vietnam profit repatriation is regulated annually and predictable. This matters because the harder it is to exit, the harder it is to enter. New investors calculate risks based not only on returns but also on the cost of withdrawal. If firms know they cannot repatriate profits or exit smoothly, they simply choose not to enter in the first place.
Pakistan still has a large consumer market, a strategic location and a growing base of young, tech-savvy talent. But unless it addresses investor concerns decisively, the exodus of companies will only accelerate. Pakistan must commit to clear, time-bound processes for winding up operations, targeting 60–90 days’ maximum. This would build confidence that investors can exit smoothly if needed. The State Bank of Pakistan (SBP) should provide monthly dashboards guaranteeing availability of foreign exchange for profit repatriation.
Predictability is key for investors managing global portfolios. Corporate tax should be gradually reduced to 25 per cent in line with regional peers, while sales tax should be unified at around 15 per cent. This would send a strong signal of competitiveness. Pakistan’s IT exports could rise from $3.2 billion in 2023 to $10 billion within a decade if protected from internet disruptions. Declaring IT parks as ‘no-shutdown zones’ would shield investors from arbitrary losses. Introduce automatic indexation mechanisms tied to inflation and currency movement, removing the need for repeated government approvals. This would encourage multinational pharma firms to reinvest in local manufacturing.
Track Pakistani firms re-registering in Dubai/UAE and offer return packages with tax holidays, regulatory fast-tracking and export incentives. Launch matching funds, sovereign wealth-backed venture funds and startup visa programmes to rebuild the venture capital ecosystem. Pakistan can learn from Saudi Arabia’s Jada Fund of Funds model, which has successfully attracted foreign VCs.
The multinational exodus of recent years is a reflection of the country’s broader economic fragility, governance gaps and policy uncertainty. If ignored, the departures of these companies could mark the beginning of a larger trend of disengagement not only by foreign investors but by Pakistan’s own entrepreneurs.
Yet, this crisis also presents an opportunity. By adopting transparent exit standards, stabilising taxation, ensuring infrastructure reliability and restoring trust in regulatory processes, Pakistan can send a strong message to the world: it is open for business again. We can either continue down the path of attrition and capital flight or reset the investment climate to re-anchor Pakistan in global value chains.
The writer is a trade facilitation expert, working with the federal government of Pakistan.
