There are many critics of the lack of non-Chinese Pakistan inbound investment over the past several years, and indeed impediments towards implementation when attempted. However, over the past year, Pakistan has made considerable progress in both increasing and diversifying sources of inbound investments.
FOREIGN DIRECT INVESTMENT
There are many critics of the lack of non-Chinese Pakistan inbound investment over the past several years, and indeed impediments towards implementation when attempted. However, over the past year, Pakistan has made considerable progress in both increasing and diversifying sources of inbound investments.
First, there have been significant increases in net FDI. In FY2024, net FDI increased by 17 per cent to circa $2 billion. For Q1 2025, Pakistan saw $771 million FDI, up 48 per cent from $520 million in Q1 2024. China on the foundation built over CPEC, continued to lead in FDI, but these investments were focused on energy transition, especially solar, where Pakistan’s progress has been labeled as one of the fastest solar revolutions in the world (goal of 60 per cent renewables by 2030; up from 1.4 per cent in June 2023)
GCC-based investments were very small; $1.8 million from Saudi Arabia and $25 million from the UAE. However, this is changing as prior pledges from other countries, including Saudi Arabia, UAE, Kuwait, Qatar, Azerbaijan and Malaysia, move from pledges to actual investments in the agreed projects.
We note several of these projects over the past year.
UAE: In May 2024, Pakistan and the UAE signed multiple agreements worth more than $3 billion for cooperation in railways, economic zones and infrastructure.
In January 2025, Pakistani officials and executives from DP World finalised terms for the freight corridor project which involves the construction of a dedicated double-track corridor and other related facilities (including a SEZ) that will run 50 km from Karachi port to the Pipri Marshalling yard. A second framework agreement covers the dredging of the navigation channel and the development of an economic zone at Port Qasim.
In January 2025, National Logistics Corporation (NLC), Pakistan’s largest logistics organisation, and DP World officially announced a strategic partnership to modernise logistics and delivery systems in Pakistan leading to new standards for improvement in the logistics and industry enhancing trade and connectivity.
Saudi Arabia: During October 2024, Saudi Arabia signed 34 MoUs totaling $2.8 billion with Pakistan across a number of industries, both inbound and outbound.
One of the largest and most important projects is the Reko-Diq Mine/Manara Minerals proposed deal. For some time, both countries have been discussing the sale of a minority stake (15 per cent) in the Reko-Diq project in Balochistan. As one of the world’s largest untapped copper and gold deposits, it is estimated to contain 5.9 billion tonnes of ore with 41.5 million ounces of gold. The current ownership structure is Barrick Gold (50 per cent), the Pakistani federal government (25 per cent), and the Balochistan provincial government (25 per cent).
As of late January 2025, this proposed $540 million investment, which is expected to be signed later in 2025, will be transformational in many ways; it will help Pakistan at the country level, at the province level in Balochistan, and at the overall Pakistan mining industry level. For Saudi Arabia, it is a major step in its strategic shift toward the global mining sector. It also secures key materials in its industrial supply chain for industrial growth. By investing in Reko Diq, Saudi Arabia is positioning itself as a key global mining player while simultaneously fortifying its economic and political ties with Pakistan.
Azerbaijan: In July 2024, during a visit by President Aliyev to Pakistan, Azerbaijan announced plans for $2 billion in investments in Pakistan.
Pakistan has successfully attracted diversified sources of foreign investments. A host of countries including China, Saudi Arabia, UAE, Azerbaijan, Qatar and Malaysia are increasingly investing here. These investments will play a critical role in reviving the overall economy, improving energy security and strengthening international relationships
In February 2025, Pakistan State Oil (PSO) and Azerbaijan’s SOCAR signed multiple MoUs to bolster Pakistan’s energy security, expand infrastructure, and strengthen bilateral cooperation including: the launch of a Joint Trading Company in Singapore, designed to enhance Pakistan’s access to global energy markets. Until the JV is operational, PSO will leverage SOCAR’s existing network in Singapore to optimize energy procurement. PSO and SOCAR also signed an MoU to expand Pakistan’s oil pipeline network, addressing the country’s current reliance on road-based fuel transport. Currently, less than a third of oil movement in Pakistan takes place via pipelines.
An agreement was also signed between PSO, Pakistan Refinery Limited (PRL) and SOCAR which outlines cooperation in refinery modernisation, project management and technical services.
PSO and SOCAR also signed a government-to-government (G2G) Strategic Partnership Agreement (SPA) to further deepen bilateral energy ties designed to strengthen Pakistan’s energy security strategy
Qatar: In November 2024, Pakistan's information minister announced that Qatar planned to invest $3 billion in Pakistan across a number of sectors, including trade, investment, culture and economy. Over the past few years, Qatar has shown a key interest in Pakistan airports including investing in them and/or in outsourcing services.
In February 2025, Pakistan's IT exporters plan to increase the export of IT and IT-enabled services to Qatar, a key potential market, to $25 million in the next few years. Pakistan's total exports to Qatar stand at nearly $200 million, with the IT sector's share estimated at $10 million.
Malaysia: In October, Malaysia’s Ministry of Investment, Trade & Industry (MITI) yielded RM2.65 billion of potential exports and RM100 million of potential investment in the next three years during the inaugural State Visit of Prime Minister Ibrahim to Pakistan. The potential exports and investment are in sectors such as palm oil, timber, fertiliser, petrochemical oleochemical, food manufacturing and pharmaceuticals.
Four MoUs were also signed to strengthen bilateral trade, including: Fauji Meat Limited and NSK signed a Letter of Intent (LOI) for a profit-sharing partnership, aimed at the distribution, wholesale, and retail of meat products, expanding Pakistan’s meat export footprint.
Gobi VC Investment Fund (an Asian-based successful VC group) pledged an initial $300,000 investment in Qistbazar (a buy-now-pay-later platform), with plans to establish a $50 million fund to support and scale Pakistani startups in the coming years.
SNA Equity committed to investing $5 million in Gamalux Pakistan, with a total investment target of $15 million by 2026. This investment will support Pakistan’s growth in the textile and recycling sectors.
Malaysia agreed to import 100,000 tonnes of basmati rice, as well as buy $200 million worth of halal meat annually from Pakistan, a key growth area for Malaysia.
Pakistan has successfully attracted diversified sources of foreign investments. A host of countries including China, Saudi Arabia, UAE, Azerbaijan, Qatar and Malaysia are increasingly investing here. These investments will play a critical role in reviving the overall economy, improving energy security and strengthening international relationships.
However, domestic security challenges are interpreted by foreign investors as a sign of uncertainty and bad governance. Considering the inherent growth potential of the country and the rewards it can offer to investors, the scale and speed of Pakistan’s growth can be increased if markets can see improvements in security and governance.
The writers can be reached at: henry@aiyana-consulting.com and @SiddiquiAftab
