Business
Shift in FDI Needed to Break Reliance on Energy Sector – SUCH TV
The Pakistan Industrial and Traders Association Front (PIAF) has cautioned that Pakistan’s overdependence on energy-focused foreign investment is holding back broader economic growth, calling on policymakers to expand investment opportunities in mining, manufacturing, IT, and other underdeveloped sectors.
PIAF Patron-in-Chief Mian Sohail Nisar said that heavy concentration of foreign capital in a single sector is concerning.
“Foreign investors continue to channel funds primarily into energy, but Pakistan has far greater potential in mining, information technology, and value-added manufacturing,” he said.
Over the past 10 years, FDI into Pakistan has ranged from $2 billion to $3 billion annually, with roughly 35% directed to the power sector, underscoring the need for diversification.
According to the State Bank of Pakistan (SBP), Pakistan attracted total foreign direct investment (FDI) of $2.46 billion in fiscal year 2024-25, a year-on-year increase of around 5%.
China remained the leading investor with $1.23 billion, nearly double its investment from the previous year, registering a 91% jump.
Other significant contributions came from Hong Kong with $470 million, the United Arab Emirates with $283 million, Switzerland with $203 million, and the United Kingdom with $202 million.
Sector-wise, the power sector continued to dominate inflows, receiving $1.17 billion, much of it in hydel projects, while financial services attracted $702.2 million.
Oil and gas exploration, electronics, IT, food, petroleum refining, and textiles were among other sectors that managed to secure a smaller share of investment.
Representatives of the business community noted that while the overall numbers for FY25 show an improvement, the gains remain fragile and heavily skewed.
They emphasised that credible projects, transparent regulations, and genuine economic opportunities are necessary to convert investor interest into broader inflows.
Without reforms, they warned, Pakistan risks remaining stuck in a narrow energy-focused pattern of investment.
A Lahore-based industrialist, Ashraf Javed, pointed out that countries in the region are moving ahead quickly.
“India and Bangladesh are attracting billions across diversified sectors like IT, manufacturing, and e-commerce, while we continue to depend on power projects,” he said. “We need stable policies, simplified regulations, and consistent tax frameworks if we want to bring long-term investors to other industries.”
Mining has emerged as one of the most promising areas for Pakistan, given the substantial reserves of copper, gold, coal, and rare earth minerals in provinces like Balochistan and Khyber-Pakhtunkhwa.
Several foreign companies, including those from the United States, have shown interest in this sector.
However, business leaders argue that without practical steps such as modernising mining laws, ensuring security for investors, and cutting red tape, interest will not translate into commitments.
Independent economists have also voiced similar concerns. Syed Afaraz Ahmad, an analyst, observed that Pakistan’s reliance on debt-driven growth makes diversified FDI more important than ever.
“Energy-related investment may keep the lights on, but it does not generate large-scale employment or strong export earnings.
Mining, technology, and manufacturing are the sectors that can change the economic outlook,” he said.
The business community stressed that Pakistan’s geographic position at the crossroads of South and Central Asia gives it a natural advantage for becoming a regional investment hub.
But they warned that without deregulation, predictability in policy, and efforts to improve ease of doing business, foreign capital will continue to bypass the country.
“The potential is there; however, the challenge is whether Pakistan can create the conditions that convince investors to move beyond energy and bring real value to the economy,” said Javed.
Osmond Chia and
Charlotte Edwardsbusiness reporters
Getty ImagesUS President Donald Trump has announced a new wave of tariffs, including a 100% levy on branded or patented drug imports from 1 October unless a company is building a factory in the US.
Washington will also impose a 25% import tax on all heavy-duty trucks and 50% levies on kitchen and bathroom cabinets, the president said as he unveiled the industry-focused measures.
“The reason for this is the large scale ‘FLOODING’ of these products into the United States by other outside Countries,” Trump wrote on his Truth Social platform on Thursday, citing the need to protect US manufacturers.
The announcements come despite calls from US businesses for the White House to not impose further tariffs.
However, Neil Shearing, chief economist at Capital Economics, said the tariff announcement on pharmaceuticals was “not quite as big a move as it appears at first sight”.
This was due to the exemptions available to generic drugs and to those firms building factories in the US.
“Many of the world’s largest pharmaceutical companies either already have some production in the US or have announced plans to build production in the near future,” he said.
The European Federation of Pharmaceutical Industries and Associations has called for “urgent discussions” to make sure Trump’s plans for new tariffs do not cause any harm to patients in the EU or the US.
The UK exported more than $6bn (£4.5bn) worth of pharmaceutical products to the US last year, according to the United Nations.
In the trade agreement signed by the US and UK in June the two countries said they intended to negotiate “significantly preferential treatment outcomes on pharmaceuticals”.
In response to Trump’s latest announcement, a UK government spokesperson said: “We know this will be concerning for industry, which is why we’ve been actively engaging with the US and will continue to do so over the coming days.”
Among the UK’s biggest pharmaceutical companies, GlaxoSmithKline already has US manufacturing plants and last week pledged to invest $30bn (£22bn) in research and manufacturing in the US over the next five years.
AstraZeneca also has plants in the US and in July said it planned to invest $50bn in the country by 2030.
William Bain, head of trade policy at the British Chambers of Commerce, said: “The UK’s leading pharmaceutical companies have committed to significant investment in the US, including in advanced manufacturing. We believe this should give them protection from any new duties.”
In the past couple of weeks, several pharmaceutical companies have pulled investment from the UK, citing a poor environment for the sector.
But Jane Sydenham, investment director at Rathbones, said the need to focus on the US was a key factor in these decisions.
“I think there’s been this ongoing narrative that the UK can’t attract investment and we’re a low growth economy,” she told the BBC’s Today programme.
“But the reality in this particular sector is that it is really more about Donald Trump’s agenda and the uncertainty that’s creating for these companies and where they might need to invest to handle the tariff proposals.”
Bloomberg via Getty ImagesThe tariffs on heavy trucks would protect US manufacturers from “unfair outside competition” and the duties would help lift American companies such as Peterbilt and Mack Trucks, Trump said.
The new levies on kitchen and bathroom cabinets, as well as some other furniture, were in response to high levels of imports, which hurt local manufacturers, the president said.
He added that the US would start charging a 30% tariff on upholstered furniture from next week.
Swedish furniture giant Ikea said the tariffs on furniture imports make doing business “more difficult”.
“The tariffs are impacting our business similarly to other companies, and we are closely monitoring the evolving situation.”
Trump’s tariff policies have been a key feature of his second term in the White House.
His sweeping tariffs on more than 90 countries came into effect in early August, as part of his policies aimed at boosting jobs and manufacturing in the US, among other political goals.
Trump had previously imposed sector-specific tariffs on steel, copper, aluminium, cars and vehicle components.
Earlier this year, the US Chamber of Commerce urged the White House to not introduce new tariffs, arguing that many parts used in truck production are sourced “overwhelmingly” from countries like Mexico, Canada, Germany, Finland and Japan.
Mexico and Canada are among the biggest suppliers of parts for medium and heavy-duty trucks, accounting for more than half of total US imports in the sector last year, said the chamber.
It warned that it was “impractical” to expect many of these parts to be sourced domestically, resulting in higher costs for the industry.
The new tariffs favour domestic producers but are “terrible” for consumers as prices are likely to rise, said trade expert Deborah Elms from research firm Hinrich Foundation.
The levies would cover more products at higher rates than Trump’s reciprocal tariffs, which were aimed at correcting trade imbalances with other countries.
These industry-specific import taxes could serve as a back-up plan to secure revenues as Trump’s sweeping duties on global trading partners are being challenged in court, said Ms Elms.
Tesco is showing no signs of “losing its grip” as the UK’s biggest supermarket – despite battling an persistent price war and a plethora of higher business costs, experts say.
Investors will be hoping the grocery giant is maintaining sales growth when it publishes its half-year financial results on Thursday.
Tesco revealed its group sales rose by 4.6% in its first quarter, compared with the prior year, having been boosted by growing demand for own-brand and premium products.
It has been steadily growing its share of the UK grocery market – picking up 0.8 percentage points over the past year to 28.4%, according to the latest analysis by Worldpanel by Numerator.
Meanwhile, its biggest rivals Sainsbury’s and Asda have seen their share of the market edge lower, while German discounters Aldi and Lidl continue to gain customers.
Tesco’s shares have soared to their highest price in more than a decade amid the strengthening performance.
Richard Hunter, head of markets for Interactive Investor, said: “Expectations will be high as ever for the supermarket, although at the first quarter numbers in June there were no signs that the company was losing its grip on dominating the British aisles.
“Indeed, the juggernaut powered on, maintaining the light between the group and its nearest rivals.”
However, Tesco’s boss Ken Murphy acknowledged at the company’s most recent trading update that the grocery market was “intensely competitive”.
It comes amid continued pressure on pricing from rival supermarkets, with Asda slashing prices this year in a bid to help turn around its fortunes.
In April, Tesco said it expects to make as much as £400 million less in profit this financial year due to heightened competition.
Mr Hunter said the prospect of a grocery price war was “not one which Tesco is taking lightly, and is mindful of a renewed attack from Asda”.
He added that any updates to its annual profit forecast on Thursday would be “warmly received” by shareholders.
A group of analysts for AJ Bell said the grocery price war is expected to impact profits, but that Tesco was also experiencing “input cost pressure, notably wages, national insurance contributions and food prices”.
It is among major retailers to back calls to the Government to limit further tax rises on the industry, as they warn it is becoming increasingly difficult to “absorb” higher costs.
It comes amid concerns about food inflation, which has been accelerating for five months in a row.
Pakistan and the International Monetary Fund (IMF) have launched their second review discussions under the ongoing loan program, focusing on revenue shortfalls, unresolved tax disputes, and fiscal reforms.
Federal Board of Revenue (FBR) sources confirmed that the IMF was briefed on the reasons behind missed tax collection targets.
The Fund reportedly urged authorities to expedite court cases involving the FBR particularly those related to super tax disputes.
According to officials, the FBR expects to recover nearly Rs200 billion if verdicts are delivered in its favor.
However, the delegation also informed the IMF that recent floods caused estimated tax revenue losses of around Rs60 billion.
During the talks, the FBR sought leniency in revenue targets, though the IMF has not yet responded.
Instead, the Fund pressed for structural measures to expand the tax base.
Sources added that Pakistan’s enforcement strategy to bridge the shortfall relies heavily on outcomes of pending super tax cases.
If court rulings go against the FBR, alternative measures will be required to secure the Rs200 billion shortfall.
The review talks also touched upon the new NFC Award, where Pakistani officials presented details of proposed revenue-sharing formulas.
Proposals include reducing the provincial share of resources, currently at 82 per cent based on population, to create fiscal space.
The IMF delegation was further briefed on last year’s fiscal targets at a meeting of the Fiscal Development Committee.
Today’s round of talks is expected to focus on the power sector and other key ministries.
Officials from the Finance Ministry expressed optimism, saying they remain hopeful about the success of ongoing negotiations with the IMF.
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