Ayesha Saba

Supporting overseas investments is critical to expanding Pakistan's export markets and integrating its businesses into the global supply chains. Experts advocate for a strategic policy shift that allows Pakistani companies to invest abroad more freely, enabling them to compete on a global scale and secure larger export orders.

Talking with WealthPK, Umar Khayam, Assistant Chief Industries and Commerce Section of the Ministry of Planning, Development and Special Initiatives, argued that Pakistan's export performance had long been constrained by its focus on producing goods domestically and shipping them abroad. “This traditional model, while functional, limits growth in highly competitive markets. To effectively tap into the global demand, Pakistan needs to enable its businesses to invest directly in the foreign markets. By owning assets abroad, whether through joint ventures, acquisitions, or setting up their own facilities, the Pakistani companies can integrate into the global supply chains more seamlessly. “This strategy can improve market access and ensure a direct pipeline to the customers.

For instance, a textile manufacturer in Pakistan can invest in a distribution center in Europe or the US, which will reduce the transportation costs and improve delivery times, both of which are key factors for international buyers. By being closer to their target markets, the businesses can better understand the customer preferences, adapt to their products more rapidly, and even benefit from the local trade agreements that reduce the tariff barriers,” he explained. Muhammad Sohail, Senior Investment Advisor at the Meezan Bank, highlighted that the businesses with presence in the foreign markets were better positioned to secure large contracts and sustain long-term growth. Multinational companies have proven this model for decades, and the Pakistani firms must now follow suit if they want to compete globally, he noted.

He emphasized that beyond just setting up sales offices, the Pakistani businesses should aim for a deeper engagement by investing in production facilities, research and development centers, or even retail outlets in strategic locations. Achieving this requires supportive policies from the government. The current regulations governing the foreign exchange and capital movement are restrictive, making it difficult for the Pakistani businesses to expand abroad. There is currently no mechanism in place for the local banks to issue the cross-border corporate guarantees to their foreign branches or other foreign commercial banks, which hinders the companies from securing financing for their overseas operations or offices, he maintained. He called for reforms that would ease the process of investing in the overseas markets, such as relaxing foreign exchange controls, simplifying regulatory requirements, and offering tax incentives for the companies that successfully expand their operations abroad.

Credit: INP-WealthPk