OPINION: Exodus of MNCs

In a recent development, another multinational conglomerate, Lotte Corporation of South Korea, has divested its business in Pakistan, delivering yet another blow to the country’s weakening industrial base and its image as a viable destination for foreign direct investment (FDI).

Lotte Chemical Pakistan Ltd, the producer of purified terephthalic acid (PTA)—a vital raw material for the textile and packaging industries—has been acquired by PTA Global Holding Ltd on November 12, 2025, transferring the company’s majority shareholding.

Several multinational companies (MNCs) have exited Pakistan since 2022 due to a host of economic challenges, each departure leaving a multiplier negative effect on the national economy.

The major causes of this exodus include the steep depreciation of the Pakistani rupee, persistently high inflation, dollar shortages, political instability, deteriorating law and order, and an overall unfavourable business environment.

In addition, factors such as the lingering impact of Covid-19, global economic slowdown, and internal restructuring decisions by parent companies have also contributed to their withdrawal from Pakistan.

However, the foremost reasons remain political instability and security concerns—including terrorism and sectarian violence—as foreign investors invariably prefer stable and secure environments for their operations.

Telenor of Norway exited Pakistan after selling its operations to Pakistan Telecommunication Company Limited (PTCL) under an agreement signed in December 2023.

Operating in Pakistan for nearly two decades, Telenor had suffered heavy losses in 2022 due to rising business costs, including soaring energy prices, higher interest rates, and an increased corporate income tax burden.

The USD 400 million acquisition deal, approved in October 2025, will result in the merger of Telenor with PTCL’s Ufone.

Global oil giant Shell Petroleum decided in June 2023 to divest its interests after serving the Pakistani market for more than three-quarters of a century.

Similarly, Procter & Gamble (P&G), one of the world’s largest consumer goods corporations, signed an agreement in April 2024 with Nimir Industrial Chemicals to sell its soap manufacturing facility near Karachi.

The pharmaceutical sector has also been hit hard. Several leading MNCs have exited due to high business costs and regulatory hurdles.

Eli Lilly of the USA ceased manufacturing and promotional operations in Pakistan in November 2022, handing over product distribution to a local company.

The German healthcare firm Fresenius Kabi discontinued operations in 2022–23, while the majority shareholding of Sanofi-Aventis Pakistan was acquired by a local investor consortium in April 2023.

Bayer of Germany also closed its operations in June 2023. In May 2024, Lucky Core Industries (formerly ICI Pakistan Ltd) acquired Pfizer’s sole manufacturing facilities in Karachi.

A number of other international firms have also wound up their businesses. Puma Energy (formerly Admore Gas) of Singapore divested its major shareholding to Cnergyico in January 2022, while TotalEnergies sold its fifty percent stake in 2024.

Uber ceased its ride-hailing services in April 2024, followed by Careem in July 2025.

Several other enterprises, including Egypt’s Swvl tech transport company with headquarters in Dubai, also discontinued operations in the country. Microsoft officially closed its physical office operations in July 2025 after maintaining a 25-year presence in the country.

The exodus of these companies underscores the mounting difficulties Pakistan faces in attracting and retaining foreign investment.

Unless urgent and comprehensive policy measures are taken, the trend could further erode investor confidence and hinder industrial development.

Economic and regulatory policies play a decisive role in promoting and sustaining business growth.

Unfortunately, Pakistan’s business environment has often been criticized for its cumbersome regulatory framework and inconsistent economic policies.

Bureaucratic red tape, excessive regulations, a liberal import policy, and a lack of transparency have made it difficult for industries to operate efficiently.

The country’s chronic energy crisis—marked by frequent power outages and gas shortages—has severely hampered industrial productivity and increased operational costs.

High tax rates, a complicated taxation system, and corruption at various levels of governance have further worsened the investment climate. Poor infrastructure, inadequate transportation networks, and inefficient logistics continue to deter both domestic and foreign businesses from expanding their operations.

Meanwhile, competing economies such as Bangladesh and the UAE have successfully positioned themselves as attractive investment destinations through consistent reforms and investor-friendly incentives. Bangladesh’s access to favourable trade agreements like the EU’s Generalized System of Preferences (GSP) has boosted its export competitiveness, while the UAE’s strategic location and business-friendly environment have made it a regional investment hub.

Contrary to investor expectations, Pakistan’s current government has been unable to implement meaningful structural reforms necessary to foster an enabling environment for investment.

Consequently, FDI inflows have continued to decline in recent years.

Nevertheless, opportunities still exist for Pakistan to reverse this downward trend.

Ensuring political stability and strengthening security are paramount to restoring investor confidence.

Simplifying the regulatory framework, minimizing bureaucratic hurdles, and introducing transparent, consistent economic policies will go a long way in improving the investment climate.

Upgrading infrastructure, modernizing transportation and logistics systems, and developing fully equipped special economic zones (SEZs) can attract foreign investors seeking well-developed industrial bases.

Tax reforms to establish a fair and predictable regime, combined with strong anti-corruption measures, are essential to create a level playing field.

Furthermore, expanding trade relations and negotiating favourable agreements with key global markets in Europe, North America, and Asia can open new avenues for exports and investment.

Ultimately, Pakistan’s ability to attract and retain FDI will depend on how effectively it can build a stable, transparent, and business-friendly environment that inspires investor confidence and supports sustainable economic growth.

Ultimately, Pakistan’s success in reversing the ongoing exodus of multinational companies will depend on its ability to restore investor confidence through political stability, transparent governance, and a predictable policy framework.

The government must act decisively to ensure energy security, streamline regulations, and strengthen institutional capacity to facilitate rather than hinder business.

A genuine commitment to reform—rooted in consistency, fairness, and integrity—can transform Pakistan into a competitive investment destination once again. Only by fostering a secure, transparent, and business-friendly environment can the country attract sustainable foreign investment and place its economy back on a path of industrial revival and long-term growth.

Copyright Business Recorder, 2025