EDITORIAL: Speaking at the Digital Foreign Direct Investment Conference 2025 in Islamabad on April 29, Prime Minister Shehbaz Sharif announced that Pakistan had secured a massive $700 million in foreign investment commitments for its IT sector.
At the same event, Information Technology Minister Shaza Fatima Khawaja outlined the country’s recent strides in the digital domain, noting a 25 percent increase in IT exports during the first nine months of FY25 and a remarkable 48 percent surge in mobile phone manufacturing over the past year.
On the face of it, these achievements signal a promising trajectory for Pakistan’s digital economy, reflecting both growing investor confidence and the government’s commitment to technological advancement. However, these accomplishments cannot obscure some unsettling realities.
Take, for instance, the foreign investment pledges that the prime minister announced with considerable fanfare. The truth is, unless these pledges materialise into tangible, on-the-ground developments, they will remain just that — promises.
The country’s history is replete with numerous instances where foreign businesses and friendly countries have expressed strong interest in investing across various sectors, yet all too often, progress has stalled at the stage of signing MoUs and Declarations of Intent.
Little wonder, then, that Pakistan is often dubbed a ‘graveyard of MoUs’, a label born of its chronic inability to turn signed agreements into substantive action. An entire range of factors underpins this troubling track record in attracting and sustaining foreign investment, including a volatile security environment both domestically and along our borders — with the fallout of the Pahalgam incident sure to further deter potential investors – chronic political instability and the myriad structural issues plaguing the economy. Compounding these issues is the persistent lack of policy consistency.
In the IT sector in particular, policy inconsistency has emerged as a critical obstacle, standing in the way of the sector truly taking off. While the prime minister eloquently outlines ambitions to position Pakistan as a hub for IT and AI, this narrative is sharply undercut by his government’s tendency to introduce legislation and take actions that constrain the digital space.
Repeated internet disruptions, arbitrary attempts to control VPN usage, sweeping laws that criminalise not only dangerous speech but also legitimate dissent, the ban on X, and an absence of a meaningful cybersecurity and data protection framework have created an unpredictable and stifling environment for IT businesses. Frequent internet disruptions — driven by the authorities’ obsession with controlling people’s online activities — for instance, have crippled Pakistan’s digital infrastructure, placing it 96th in mobile internet speeds and 143rd in fixed broadband as of March.
Furthermore, $10-20 million per day is lost in ad revenue on platforms like Facebook and YouTube during social media blackouts, while cloud service providers lose $2-5 million daily during times of internet disruptions. Compounding matters are data localisation requirements, limited spectrum availability and high taxation and import duties on digital equipment and software.
The losses, however, cannot be measured in monetary terms alone. The reputational damage that has been caused to Pakistan raises serious questions about its credibility as a country aspiring to lead in innovation and technology.
Most dangerously, government policy has fostered a climate that constitutes a particularly pernicious form of non-tariff barrier that undermines digital growth, innovation, investment and economic competitiveness. It’s increasingly evident that much of the progress the country has made in the digital realm owes more to the resilience, ingenuity, and talent of its youth than to any coherent government strategy, and if the authorities stay the current course, Pakistan risks wasting the untapped potential of its young population.
It’s time to shift away from outdated control tactics and foster an environment that supports innovation and creativity, or the country will miss out on the opportunity to lead in the digital age.
Copyright Business Recorder, 2025
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