‘Exodus’ of MNCs

Pakistan is witnessing a silent but alarming corporate exodus. Global giants that once symbolised investor confidence are leaving or scaling down operations. Shell Pakistan sold its entire stake to a local buyer. Recently, the Procter & Gamble has announced it will wind down direct operations. Eli Lilly, Sanofi, and other pharmaceutical multinationals have either sold their portfolios or reduced manufacturing footprints. Siemens, once an emblem of industrial technology, has shrunk its local presence to a whisper.

The reasons for this retreat run deeper than the balance sheets of a few corporations. They tell a story of an economy struggling with credibility, predictability, and the fundamental preconditions of investment. To comprehend what the footprints of multinationals mean to the economic, fiscal and social landscape of Pakistan one has to recognise the influence of their presence on all the said three factors. Many appear to be unaware of it.

The Overseas Investors Chamber of Commerce (OICCI) members’ contribution to Pakistan’s national exchequer alone includes a significant portion of total taxes and levies, with approximately one-third collected from them. In 2023, OICCI member companies paid Rs 2.4 trillion in government levies, and over the last 10 years (ending 2023), they invested USD 22.6 billion in Pakistan, showcasing strong confidence in Pakistan’s economy. OICCI members made a substantial new capital expenditure of over Rs 455 billion annually. They also contribute through foreign direct investment, employment, and substantial corporate social responsibility (CSR) activities. The members provide direct and indirect employment for approximately one million people.

The exodus of multinational companies bites into tax collection, foreign direct investment, technology transfer, employment and social creativity. With the local industry under pressure there are no alternative venues to compensate the losses emerging out of multinationals’ exodus.

The multinationals’ exit syndrome needs to be seriously looked into and there are glaring factors to dig into.

At the heart of the problem lies macroeconomic instability. Currency volatility, the scarcity of foreign exchange, and the inability of companies to repatriate profits have made operating in Pakistan a high-risk proposition. For years, multinational corporations (MNCs) complained that they could not access dollars to pay dividends or import essential inputs. This hit their cash flows.

Adding to the uncertainty is a policy environment that changes faster than it can be implemented. Tax rates shift mid-year, regulatory approvals stall, and sectoral surcharges appear without warning. In the energy and pharmaceutical sectors, pricing controls and delays in regulatory decisions erode profitability. Even when companies have weathered these storms, they face bureaucratic bottlenecks that sap time, money, and morale. At times compliance to fair business practices is a challenge.

Global corporate boards, reviewing their South Asian portfolios, see a simple calculation: in a market of 240 million consumers, Pakistan’s returns do not justify the risk. They redirect capital to Bangladesh, Vietnam, or the Middle East — markets that offer steadier rules, stronger logistics, and better profit conversion.

The economic cost of this corporate flight is enormous and largely unmeasured. Every multinational that leaves takes away not just capital, but an ecosystem of skills, supply chains, and technology transfer.

When Shell exits, it takes decades of operational expertise in energy logistics. When P&G or Eli Lilly pull out, hundreds of trained workers lose exposure to global quality standards and manufacturing technology. When Siemens scales down, Pakistan loses a pipeline of technical know-how that could have strengthened its engineering base.

The question arises whether the trend of this exodus can be reversed?

The answer is in the affirmative. The trend can be reversed through credible, immediate, and structural action. First, the government must restore investor confidence by ensuring foreign-exchange repatriation guarantees. Delays in profit remittances have done more damage to Pakistan’s reputation than any single tax change. A transparent, time-bound mechanism for repatriation is essential.

Second, policy stability must be institutionalized. Investors need multi-year tax and tariff certainty. The government can issue “investment stability pacts” — three-year agreements protecting firms from arbitrary fiscal changes in exchange for job creation and export commitments.

Third, regulatory agencies must move from control to facilitation. Licensing, pricing, and quality regulations should have defined service timelines. Digitalisation of procedures can eliminate rent-seeking and unpredictability.

Fourth, the energy and infrastructure ecosystem must be made reliable. Frequent power shortages, abrupt tariff hikes, and port bottlenecks destroy competitiveness. A targeted “industrial reliability package” offering predictable energy supply to high-value sectors can make a visible difference.

The Chambers of Commerce and Industry of the country can play a significant role in arresting the exodus.

Notably, The Overseas Investors Chamber of Commerce and Industry (OICCI) can play a pivotal role in bridging the widening trust deficit.

OICCI can also act as the government’s strategic partner in investor retention. A joint Investor Confidence Task Force — co-chaired by the Finance Minister and OICCI leadership — could serve as a fast-track platform for grievance redressal. Its success should be measured by resolved cases, not the meetings held.

Lastly, both government and business leaders must rebuild Pakistan’s global image. Investor confidence is as much about perception as policy. Consistent communication, visible reforms, and transparency in economic data can gradually change the narrative from risk to recovery.

Copyright Business Recorder, 2025