ISLAMABAD: The Federal Board of Revenue (FBR) has been accused of creating a hostile environment for the business community, resulting in the exit of multinational companies (MNCs) and local businesses. This criticism was voiced during a meeting of the National Assembly Standing Committee on Commerce, chaired by Jawed Hanif Khan, while discussing recent trends of multinational companies scaling back or exiting their operations in Pakistan.
Shaista Pervaiz Malik, a Member of the National Assembly from the treasury benches, expressed strong resentment over what she termed “harassment” by the FBR, saying such actions were forcing companies to leave Pakistan. She also pointed out that foreign companies were facing difficulties in repatriating their profits.
“FBR has made the business community hostile. As a result, not only multinational companies are shutting down their operations and leaving the country, but local businessmen are also being forced out,” she said.
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Briefing the committee, a representative of the Board of Investment (BoI) stated that Pakistan follows an open investment policy that does not require pre-screening or prior approval for foreign investors. All sectors are open for foreign investment unless specifically prohibited or restricted due to national security or public safety concerns.
He further noted that restricted sectors include arms and ammunition, high explosives, radioactive substances, securities and currency, and consumable alcohol. There is no minimum equity requirement for foreign investment, and no upper limit on foreign equity ownership, except in specific sectors such as airlines, banking (less than 49 percent), agriculture (less than 60 percent), corporate agriculture farming (100 percent), and construction, which requires a joint venture with a local company. Foreign direct investment is not permitted in the media sector.
The BoI representative further stated that the recent scaling back or exit of some multinational companies should be viewed in a broader global and sectoral context.
Many multinational firms are rationalizing their footprints, shifting to asset-light models, or consolidating operations due to global inflation, high interest rates, supply-chain reconfiguration, and shareholder pressure.
“In several cases, these exits reflect global corporate restructuring or market prioritization rather than Pakistan-specific disengagement,” he noted.
He acknowledged that domestic structural constraints have also influenced investment decisions. These include macroeconomic volatility—such as exchange rate fluctuations, inflation, and balance-of-payments pressures—regulatory complexity, fragmented compliance requirements, delays in profit repatriation and foreign exchange approvals, and the high cost of doing business due to energy prices, taxation, and logistics.
Copyright Business Recorder, 2025
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