Pakistan’s technology exports have crossed $4 billion in the ongoing fiscal year. Its freelance economy is among the largest in the world. Millions of Pakistanis are active in digital finance and crypto. The country has young talent, improving connectivity and a large domestic market. And yet, foreign direct investment in Pakistan’s IT sector is not only minuscule, but it also fell sharply between 2022 and 2024. And it was not a minor dip.
FOREIGN INVESTMENT
Pakistan’s technology exports have crossed $4 billion in the ongoing fiscal year. Its freelance economy is among the largest in the world. Millions of Pakistanis are active in digital finance and crypto. The country has young talent, improving connectivity and a large domestic market. And yet, foreign direct investment in Pakistan’s IT sector is not only minuscule, but it also fell sharply between 2022 and 2024. And it was not a minor dip.
That contradiction says a lot. Pakistan has talent, but not enough institutional credibility. It has potential, but potential alone does not attract serious long-term capital. And it is important to understand this contradiction as the global FDI game is changing drastically.
For decades, developing countries attracted foreign investment through cheap labour, raw materials, land, and access to local markets. That model still exists, but the bigger opportunity has moved elsewhere.
Today’s most valuable FDI is going into data centres, cloud infrastructure, Global Capability Centres, R&D hubs, semiconductor supply chains, green technology, and advanced manufacturing. This is the new FDI. It is smarter, more export-oriented and strategic, creating better jobs, building skills, transferring technology and strengthening exports. Countries that moved early are pulling ahead. Others are now trying to catch up.
Pakistan is somewhere in the middle. It has many of the building blocks, but it has yet to turn them into a credible, investor-ready proposition.
The Asean region shows where the new investment race is going. Data centres, cloud computing and AI are attracting significant investment to Malaysia, Thailand and Indonesia. Amazon Web Services, Google, and Microsoft are not choosing these markets only because they are cheaper. They are choosing them because the rules are clearer, approvals move faster and energy planning looks more reliable. Data centres are now at the heart of this shift. AI requires massive computing capacity, and supply remains short. Southeast Asia has moved quickly to turn that shortage into an opportunity.
The same is happening with Global Capability Centres, or GCCs. These are offshore centres where multinationals run technology, finance, engineering, analytics, research and product work. They are no longer simple back offices. Many have become core hubs for global operations. Our next-door neighbour has become the leader here, with more than 1,800 GCCs and nearly two million people working in the sector. Its edge is not just talent. It is consistency. Approvals are easier, foreign ownership is allowed, talent pipelines are strong and policy direction is clear.
Malaysia might not have its scale, but it executes well. Through special economic zones, tax incentives, strong facilitation and the Johor-Singapore corridor, it has made itself easy for investors to choose. Thailand has done the same with focus. It is pushing advanced manufacturing, biotech, digital projects, and semiconductor-linked supply chains. It has also cut approval times, sending a simple message: investor time matters.
The common thread across these countries is not just incentives. It is clarity, consistency and credibility, which is exactly where Pakistan struggles. However, Pakistan does have real assets to move in the direction. When it comes to energy, Pakistan has announced allocating 2,000MW of electricity for AI data centres and digital infrastructure. This is a signal that data centre investors need reliable power before they even begin serious due diligence. Pakistan also has major renewable energy potential, including wind in the Gharo-Keti Bandar corridor, solar across Sindh and Balochistan and hydropower in the north.
Investors do not only look at the current tax rate. A clear 15-year plan for export-focused technology, data and shared services companies would work better than short-term, scattered incentives
Coming to connectivity, new submarine cable links and improved digital infrastructure can strengthen Pakistan’s bandwidth, redundancy, and latency profile. Data centre projects in Karachi like Data Vault Pakistan’s first AI-focused data centre and Gul Ahmed Energy Group’s $230 million Tier III facility through its QGDC venture show that local and foreign investors are beginning to explore the space.
Pakistan also has scale. It has a population of around 240 million, with a large youth base. It has more than 200 million mobile connections. Internet penetration continues to rise. The country produces engineers, software developers, freelancers, and STEM graduates every year. Its diaspora in the Gulf, the UK and North America is also large and well placed to give a boost to the technology story.
These are building blocks of a serious investment pitch. But they are not enough. Global investors have choices. A company setting up a GCC, data centre or R&D hub can go to Malaysia, Vietnam, Thailand, Indonesia, the Gulf or Eastern Europe. Pakistan is competing with all of them. Talent and low cost are not enough. It must reduce risk.
First, Pakistan needs a focused GCC and Shared Services Policy. This should not be another broad IT policy; it should be tailored for global companies looking to set up offshore centres for engineering, finance, analytics, product development, cybersecurity, and AI. The offer must be clear: full foreign ownership, fast approvals, simple taxation and a real single-window process. Many Pakistanis hold senior roles in multinationals globally. They can open doors, but only if Pakistan gives them a serious offer.
Second, Pakistan needs export-only technology zones with long-term tax certainty. Investors do not only look at the current tax rate. A clear 15-year plan for export-focused technology, data and shared services companies would work better than short-term, scattered incentives. Third, Pakistan needs a proper National Data Centre Strategy. The 2,000MW allocation is a good start, but investors need an ecosystem: land, reliable power, green energy options, clear tariffs, cooling infrastructure, telecom backup, cybersecurity rules, data protection laws and easy import of equipment.
Fourth, Pakistan must end the NOC culture. Low-risk businesses should not be trapped in long approval processes. Approvals should be digital, time-bound and coordinated across departments. If an agency does not respond within a fixed time, approval should be automatic. If Thailand and Vietnam can speed up approvals, Pakistan can too.
Fifth, Pakistan must build skills investors need. Graduates alone are not enough. GCCs and R&D centres need job-ready talent in AI, cloud, cybersecurity, data, product, finance and advanced manufacturing. A focused skills plan with industry can turn Pakistan’s young population into a real advantage.
Pakistan is not starting from zero. It has a stabilising economy, a young digital population, renewable energy potential and a growing realisation that the old FDI model is no longer enough.
But the race is moving fast. Malaysia has execution. Thailand has focus. The Gulf has capital and speed. Vietnam and Indonesia are pushing hard too. Pakistan cannot afford another cycle of slow decisions and half reforms.
The opportunity is real, but it will not wait. The next generation of global investment is already being allocated. Pakistan’s challenge is simple: build the discipline, certainty and credibility investors need, before the window moves elsewhere.
The writer is the secretary general of the OICCI.
