LAHORE: Pakistan is witnessing a quiet but consequential economic trend: the steady exit or downsizing of multinational companies (MNCs) from the country. In a globalised world, some churn is normal. It becomes an indictment of the economic environment and a warning sign for policymakers.
Local brands did grow stronger in several sectors. In soaps, detergents and shampoos, domestic players such and private-label products challenged global giants with cheaper price points. In razors, Gillette faced competition from Turkish and Chinese brands. In motorcycles, Japanese players encountered pressure from Chinese models that cost a fraction of the price.
What makes this trend especially troubling is that these exits are not driven by domestic competition alone. They reflect deeper, long-standing structural weaknesses that Pakistan has ignored for decades. Unfortunately, the narrative in public discourse often oversimplifies the issue by attributing corporate exits to competition from local brands or cheaper Chinese alternatives. The truth is far more complex — and far more alarming.
The first and most critical reason behind the exodus is Pakistan’s macroeconomic instability. No multinational can operate in a country where the currency loses 20 to 30 percent of its value almost every year, inflation remains persistently high, and demand declines in real terms. These factors alone would be enough to make companies rethink their presence. But Pakistan added another layer of unpredictability: restrictions on repatriation of profits.
During the recent foreign exchange crisis, several companies waited months — in some cases over a year — to send dividends or royalties abroad. For a global corporation listed on a stock exchange, where financial reporting must be precise and predictable, this is unacceptable. When Pakistan stopped companies from freely moving their legitimately earned profits, it signalled that the rules of business could change overnight. For risk-averse investors, this is a deal-breaker.
Another major factor was the erosion of the country’s middle class — the primary target market for consumer-facing MNCs. As inflation surged, items once purchased weekly or monthly became luxury products. When volumes fall year after year, even the best brands struggle to justify their fixed costs. Many multinationals realised that the Pakistani consumer was no longer growing; in fact, they were declining in real purchasing power. For a company rooted in volume-driven growth, this is a dead end.
Pakistan’s regulatory environment has long been riddled with unpredictability. Sudden changes in duties, ad hoc import restrictions, inconsistent taxation, and unpredictable price controls create an atmosphere where long-term planning becomes impossible. Multinationals operate on five- to ten-year investment horizons. Pakistan’s policy framework, unfortunately, often changes from quarter to quarter.
Pakistan still has tremendous investment potential. A population exceeding 250 million, a predominantly young workforce, natural resources yet to be exploited, a growing digital sector and a strategic geographic location offer undeniable advantages. But potential does not attract capital — stability does.
In the short term, a flood of new foreign investment is unlikely. The global investor community views Pakistan as a market with high risk and uncertain returns. However, selective investment will continue in sectors such as IT, renewable energy, mining, services, logistics, food processing and export-oriented manufacturing.
In the medium to long term, Pakistan can reclaim its attractiveness — but only if it demonstrates a sustained commitment to macroeconomic stability and structural reform. Investors need to see that profit repatriation is fully restored, taxation is predictable, regulations are rationalised and governance is strengthened.
The departure of multinationals is not merely a corporate decision; it is a symptom of a system in distress. If Pakistan fails to understand the underlying reasons behind these exits — and worse, continues to blame them on local competition — it risks repeating the same mistakes.
Multinationals are leaving not because local brands are too strong, but because the environment is too weak. Their departure is a warning. Whether Pakistan chooses to act on it will determine if the next decade is one of lost opportunities or regained economic credibility.
