EDITORIAL: Apparently, another USD 10 billion to USD 15 billion in investment is waiting to enter Pakistan’s economy, provided the government can produce the right policy framework.
The finance ministry now hopes to finalise a National Private Equity Framework within two weeks, drawing inspiration from arrangements in the United Kingdom, India, and the Middle East.
The objective is to mobilise domestic savings, attract foreign institutional investors, and provide businesses with much-needed risk capital. All perfectly desirable goals, of course.
But after years of ambitious investment announcements, elaborate reform proposals, and disappointingly modest results, the government should explain what makes this latest exercise any more likely to deliver than its predecessors.
The first question concerns the numbers themselves. Where does the USD 10-USD 15bn estimate come from? Has the government identified investors prepared to commit these sums, assessed the availability of commercially viable projects or established a realistic timeframe for deployment?
The reported discussions provide little indication of how the target was calculated. Nor is it clear whether the figure represents potential commitments over several years or an expectation of actual investment inflows. Such distinctions are fundamental to serious economic planning, particularly in a country where announced investment intentions have repeatedly proved easier to secure than actual capital.
There is also the matter of international comparisons. The government reportedly intends to draw upon private equity models operating in the UK, India and Middle Eastern markets. But these economies differ considerably from Pakistan in institutional capacity, financial market depth, investor participation, regulatory enforcement, and opportunities for existing investments. Their experience certainly offers useful lessons, but which specific provisions are suitable for Pakistan, and how will they be adapted to local conditions? Simply invoking successful foreign models provides little reassurance about the prospects of reproducing their results in a fundamentally different economic environment.
Private equity requires considerably more than favourable tax treatment and permission for financial institutions to invest in funds. Investors need credible financial disclosures, enforceable contracts, predictable taxation, effective corporate governance and reliable mechanisms for eventually selling their stakes. They must also find businesses capable of generating commercially attractive returns.
Pakistan’s persistent difficulties with policy reversals, taxation disputes, regulatory uncertainty and weak investor confidence cannot be resolved merely by establishing another investment vehicle. Unless these underlying problems are addressed, the proposed framework risks creating additional channels for capital which investors will be reluctant to use.
Some concrete regulatory movement has been reported. The State Bank has increased the permissible investment limit for banks in a single private equity fund from 10 percent to 20 percent, while proposals for treating funds as tax-transparent vehicles are under consideration. These measures deserve examination, particularly their implications for financial stability, revenue collection and regulatory oversight.
Yet the reported increase in banks’ exposure to real estate investment trusts offers limited evidence of what a broader private equity market might achieve.
Real estate investment structures and private equity financing for productive enterprises involve different risks, investment horizons, and commercial considerations.
The finance minister is right to emphasise domestic capital mobilisation before expecting foreign investors to follow.
But the government must explain how savings held by banks, insurers, pension funds, and other institutions will be channelled into productive investment without compromising their existing obligations or exposing beneficiaries to poorly understood risks. It should also identify the sectors, projects, and enterprises expected to absorb the proposed funding, alongside credible estimates of returns, financing requirements and investment horizons.
The two-week deadline may be achievable for finalising a policy document, especially if preparatory work is advanced. Developing a functioning private equity ecosystem will take considerably longer.
The government should therefore publish a phased implementation plan, distinguish regulatory changes from legislative proposals and establish measurable milestones for actual capital mobilization, and investment deployment.
Pakistan desperately needs investment, deeper capital markets and new sources of long-term financing. Serious efforts to develop them deserve support. But economic credibility requires discipline in setting targets and candour about the obstacles to achieving them.
The finance ministry has presented another impressive investment ambition. It is time to demonstrate how the money will actually arrive.
Copyright Business Recorder, 2026