FDI = Security: the investment equation Pakistan cannot ignore
The latest Security Survey 2026 by the Overseas Investors Chamber of Commerce and Industry (OICCI) should serve as a red flag for policymakers.
The finding that 71 percent of leading foreign-investor companies rank security among their three most pressing business concerns is more than a statistical observation—it is a reminder of a fundamental principle of international investment: Foreign Direct Investment (FDI) follows security as closely as it follows profitability.
Every investor evaluates a prospective destination through two primary lenses. The first is commercial viability—market size, profitability, taxation, regulatory environment, and ease of doing business.
The second, and equally important, is the security of people, assets, and supply chains. While governments can improve profitability through fiscal incentives, tax concessions, and regulatory reforms, no financial incentive can adequately compensate for uncertainty regarding the safety of employees and investments.
Capital is inherently risk-sensitive. Unlike portfolio investments, which can be withdrawn with the click of a button, FDI represents a long-term commitment involving factories, infrastructure, technology, intellectual property, and human capital. Such investments often require decades to recover costs and generate sustainable returns.
Before committing investment multinational corporations undertake extensive risk assessments. Security occupies a prominent position in these evaluations.
Pakistan’s recent economic policy has focused heavily on attracting foreign investment through the Special Investment Facilitation Council (SIFC), privatization initiatives, tax reforms, and sector-specific incentives. These initiatives are necessary and commendable. However, their effectiveness will remain constrained unless they are supported by a stable and secure operating environment.
The OICCI survey highlights growing concerns over the deteriorating law and order situation in Karachi, Pakistan’s commercial capital. Meanwhile, security challenges continue to persist in parts of Balochistan and Khyber Pakhtunkhwa. Karachi alone contributes a substantial share of Pakistan’s industrial production, exports, banking activity, and tax revenues. Any deterioration in its security environment inevitably affects business confidence across the country.
Security concerns extend well beyond the direct cost of crime or terrorism. They translate into higher insurance premiums, increased expenditure on private security, disruptions in logistics, reluctance of expatriate executives to relocate, difficulties in attracting international technical experts, interruptions in production schedules, and increased operational costs throughout the supply chain.
These hidden costs significantly erode Pakistan’s competitiveness relative to regional investment destinations.
Multinational corporations also face growing scrutiny from their own boards, shareholders, insurers, and environmental, social, and governance (ESG) frameworks. Corporate directors today must demonstrate that employees are not being exposed to avoidable risks. Consequently, even highly profitable projects may be deferred if the perceived security environment falls below acceptable international standards.
The global experience offers numerous examples. Singapore, Vietnam, Malaysia and many more comparable economies have all succeeded in attracting substantial FDI not merely because of fiscal incentives but because investors have confidence in the safety of conducting business. Investors are willing to accept moderately higher operating costs in jurisdictions where predictability and security are assured.
Conversely, countries with abundant natural resources have frequently struggled to attract sustained foreign investment because security risks overshadow commercial opportunities. Investors do not simply compare tax rates or labour costs; they compare total risk.
Pakistan possesses considerable strengths. It has a strategic geographic location, a population exceeding 250 million, a large consumer market, competitive labour costs, improving digital infrastructure, and significant opportunities in energy, mining, agriculture, information technology, healthcare, and manufacturing. Yet these advantages cannot be fully translated into investment unless accompanied by consistent improvements in public security.
This challenge is not solely the responsibility of law enforcement agencies. It requires coordinated national action involving intelligence agencies, provincial governments, the judiciary, local administrations, transport authorities, and municipal institutions. Urban policing, swift criminal justice, protection of industrial zones, secure transport corridors, cyber security, and effective crisis management all contribute to the overall investment climate.
Equally important is the perception of security. International investors often respond as much to headlines as to statistics. A few high-profile incidents can outweigh years of steady progress. Therefore, maintaining security requires not only operational effectiveness but also transparent communication and sustained confidence-building.
Pakistan’s economic ambitions demand a significant increase in FDI. Domestic savings alone cannot finance the scale of industrial expansion, infrastructure development, technological upgrading, and export diversification required for sustained economic growth.
Foreign investment brings not only capital but also technology transfer, management expertise, integration into global value chains, employment generation, and export competitiveness.
The equation is therefore simple: Profitability attracts investor interest; security converts that interest into investment. One without the other is insufficient.
Pakistan has demonstrated remarkable resilience over the years. It has overcome formidable security challenges in the past through determined national effort. Renewing that commitment is now an economic imperative. Every improvement in security strengthens investor confidence, while every setback carries an economic cost far beyond the immediate incident.
If Pakistan genuinely seeks to become a preferred destination for global investment, it must recognize an enduring reality of international business: there is no sustainable FDI without sustainable security.
Copyright Business Recorder, 2026
The writer is a former President OICCI; Global Business Leader and Strategic Affairs Analyst