ISLAMABAD: A research report prepared by the Institute of Cost and Management Ac­­countants of Pakistan (ICMAP) examines the exits and operational shifts of multinational companies and observes that the country’s business environment is at a turning point. Exits and downsizing reflect rising costs and policy uncertainty. While the growing use of digital and asset-digital models points to new ways to stay competitive, says the report ‘Diagnosis of Multinational Exits from Pakistan’. According to the report, MNCs face both opportunities and challenges. The country’s large market and strategic location offer strong growth potential, but rising costs, unpredictable regulations, and weak infrastructure make operations difficult. These domestic issues, along with global business shifts, are pushing many MNCs to restructure, scale down, or even exit the market, it says. Restrictions on foreign exchange and delays in profit repatriation have historically deterred foreign investors. Profit repatriation declined sharply from $1.7 billion in FY21 to $273m in FY23, limiting reinvestment potential. However, FY24 witnessed a remarkable recovery to $2.215bn, followed by $2.1bn in FY25, reflecting improved profitability in select sectors and strategic capital adjustments. > MNCs’ exit signal rising costs, policy uncertainty Lengthy processes for permits, tax clearances, and customs approvals remain a persistent barrier. While reforms have aimed to streamline investment procedures, bureaucratic inefficiencies continue to slow operations and increase compliance costs. High electricity tariffs, inconsistent supply, and outdated logistics networks elevate production and transport costs. Export-oriented firms face additional port delays and limited road and rail connectivity, which affect delivery timelines and competitiveness in international markets. Despite targeted strategies, Pakistan is still perceived as a high-risk but high-potential market. Many MNCs adopt a “selective presence” approach, retaining profitable business segments, outsourcing non-core operations, or forming local partnerships instead of a complete exit. Investor confidence is shaped not only by macroeconomic trends but also by the clarity, predictability, and ease of doing business in the country. Multinational companies in Pakistan operate in a landscape marked by both promise and challenge. While global market dynamics influence investment strategies, it is the domestic environment, rising costs, inflation, regulatory uncertainty, infrastructure gaps, and competitive pressures that largely determine operational choices. High taxation, fluctuating energy costs, and administrative bottlenecks weigh heavily on profitability, compelling MNCs to rethink business models. Simultaneously, evolving consumer preferences and digitalisation pressures drive innovation and strategic adaptation. The significant rebound in repatriated profits in fiscal year 2024, sustained into fiscal year 2025, highlights both the resilience of MNCs and the opportunities in sectors that adapt effectively to these challenges. Pakistan remains a dynamic and evolving market that continues to attract global attention, even as some MNCs restructure or adjust their operations in the country. Despite some operational downsizing, Pakistan continues to attract foreign investment across automotive, energy, finance, IT, e-commerce, and mining sectors. _Published in Dawn, December 7th, 2025_

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