The military battle with India may have dominated headlines for the past few weeks, but now the real challenge is economic and Pakistan must win this one by accelerating reforms, boosting growth, rationalizing taxes and incentives.
Pakistan must no longer wait for investors; it must call them to seize the moment.
The way Chinese support was visible, its presence in the economic front is equally important.
For Pakistan, Chinese investors are not just business partners but strategic allies in the country’s journey toward sustainable economic transformation at a pivotal moment in history.
This partnership is pivotal in navigating regional challenges and unlocking shared growth opportunities.
Similarly, for Chinese investors, Pakistan’s evolving landscape offers something rare and while the scale, speed and impact of investments remain unpredictable, the potential through market forces is significant, especially under the platform of CPEC.
In this pursuit, the difference between success and failure will come down to flexibility, resilience and the ability to navigate an environment where security challenges remain.
The Chinese investors backed by the SOEs must appreciate that Pakistan is not a simple story of risk, but one of calculated opportunity.
Despite policy reforms and infrastructure upgrades like the Pakistan Single Window (PSW), Pakistan’s investment potential remained constrained by poor inter-agency coordination, limited market intelligence and underuse of data analytics for investor targeting.
While efforts such as visa-on-arrival, fee exemptions and strategic engagement with China and the Middle East reflect a proactive stance, systemic challenges persist.
The Foreign Investment (Promotion and Protection) Act 2022, Pakistan Investment Policy 2023 and the Special Investment Facilitation Council (SIFC) are positive steps, but a comprehensive overhaul of investment governance is still needed as the investment in the past 3 years have averaged only 13.1% far below the South Asian average of 27.8%.
Success in attracting Chinese investment will require an approach that integrates deep market intelligence, diplomatic outreach and nimble marketing strategies in sectors where Chinese expertise along with capital exists and Pakistan has the competitive advantage that can create mutual benefits.
Collaboration with Chinese business leaders can help anticipate economic shifts and tailor offerings to sector-specific investor interests.
It is equally critical to dispel outdated narratives about relocating manufacturing from China to Pakistan because of labour cost, especially as tax incentives in Special Economic Zones (SEZs) face resistance from IMF, instead, Pakistan should highlight its growing internal market, strategic location on the Belt and Road Initiative (BRI) and emerging opportunities in sectors like energy, tourism, mining, IT and digital economy.
The government must also strengthen legal and regulatory frameworks to protect Chinese investments, foster joint ventures and facilitate technology transfer and also improve the performance within BOI and CPEC cell in attracting new initiatives and projects.
Similarly, the Chinese Government may direct their enterprises to improve the level of interaction with Pakistan enterprises and government agencies and make a fair risk assessment based on mutual trust.
Even today, despite the narrative of excess energy by some stakeholders, the energy sector remains the backbone of Pakistan’s growth story.
Beyond pending CPEC hydropower projects like Azad-Pattan etc in AJK (which become critical after the concerns on IWT), Pakistan is ripe for pioneering ventures in green hydrogen, solar and wind energy.
With its abundant renewable resources, Pakistan could become a hub for hydrogen energy production, serving both domestic needs and energy-export markets.
Infrastructure development is another arena where Pakistan still has an advantage.
Gwadar port, a jewel in the China-Pakistan Economic Corridor (CPEC), is slowly transforming from a deep-sea port into a multi-dimensional economic zone.
The recently inaugurated Gwadar International Airport enhances its regional connectivity, making the city a focal point for logistics and trade.
But to make the port more efficient and profitable requires increased resolve in improving the security across Balochistan, streamline customs, immigration, quarantine and inspection under one digital platform and reduced overlap between federal, provincial and local bodies.
Chinese investment can also be attracted to automated cargo handling, modern warehousing and cold storage.
Through these measures we can market Gwadar as a cheaper, shorter transit route with incentives for logistics operators.
Similarly, the ML-1 railway project offers a transformative opportunity for regional integration, one that significantly outweighs the associated risks.
It must be fast-tracked through a well-structured Special Purpose Vehicle (SPV) with a joint ownership model, bringing together Pakistan Railways, a Chinese consortium, multilateral lenders and potentially private sector operators, to establish a corridor linking Gwadar with Central Asian Republics (CARs) under seamless security protective cover.
Pakistan’s tourism sector is now on the cusp of transformation through strategic initiatives like Integrated Tourism Zones (ITZs) which needs to be carefully pitched to the Chinese private sector.
This revitalization, supported by improved road infrastructure, better visa facilitation and increased flight connectivity, is projected to push tourism revenues to almost double.
Chinese investors experienced in eco-tourism, hospitality and smart-tourists city infrastructure can help shape resorts powered by renewables and connected by upgraded transport, creating economic opportunities for local communities while preserving cultural heritage.
Lastly, Pakistan’s mineral wealth has finally taken center stage following the recent Minerals Summit in Islamabad, where a new roadmap was unveiled to attract foreign investment in the mining and minerals sector.
With reserves of copper, gold and strategic minerals vital for the global energy transition, Pakistan now offers Chinese investors an entry point into one of the last untapped resource frontiers in the region.
Pakistan’s offer of sovereign guarantees for mineral exploration and security assurances, particularly for Chinese firms operating in Balochistan and Gilgit-Baltistan can further strengthen the investment proposition.
Chinese companies with capabilities in green mining, sustainable extraction and complete mineral value chains from processing to export can thus play a transformative role.
Yet policy success will hinge not only on incentives but on transparency, consistency and security like our competitor countries that are adopting aggressive FDI attraction.
For Chinese investors, the choice is clear: Pakistan offers a growing market with immense potential, an improving business environment and openings at the crossroads of traditional strengths and emerging frontiers.
Acting now means securing a foothold in a fast-evolving landscape and playing a defining role in shaping the future of regional economic integration and on our part the investment promotion agencies (IPAs) must modernize their marketing strategies and embrace tailored, technology-driven approaches to remain ever relevant and competitive in this challenging environment.
The Government must recognize that investment will only flow into Pakistan if there is a compelling profit margin coupled with disciplined and transparent risk management.
The challenges are there and real, but if Pakistan can win a battle with a formidable adversary, this challenge is much within our reach.
We must remember, in war or policy manifestation, it’s the person behind the gun and the desk that makes the difference.”
The author is an Investment & Projects Management specialist and faculty member of various institutions/ universities.
He is Senior Advisor to CEEC. ([email protected])
