Pakistan's investment crisis deepens as SIFC fails to revive investor confidence

New Delhi, Jan 4 (IANS) Pakistan’s investment climate is facing a deepening crisis, with fresh data and recent developments showing that the country is struggling to attract both local and foreign capital despite repeated policy initiatives.

Pakistan’s investment-to-GDP ratio remains stuck at around 13.1 per cent, far below the regional average of over 30 per cent.

This places Pakistan among the weakest performers in its neighbourhood, where higher investment levels have helped economies boost growth, productivity and competitiveness.

Economists say this gap reflects long-standing structural problems rather than short-term economic shocks.

The situation has cast a shadow over the Special Investment Facilitation Council (SIFC), which was launched two years ago with the promise of fast-tracking large investments and cutting through bureaucratic hurdles.

Backed by both civilian and military leadership, the SIFC was projected as a powerful platform that could revive Pakistan’s slowing economy by attracting foreign capital.

However, two years on, the council’s performance has fallen well short of expectations. Despite its broad authority and high-level support, the SIFC has failed to deliver significant investment inflows.

While several high-profile meetings and announcements were made, most proposed projects remain stuck at the discussion stage.

Investor confidence has shown little improvement, and capital inflows have remained weak.

Even within policymaking circles, there is now a quiet acknowledgment that the SIFC has not produced the results it promised.

Yet, instead of rethinking the overall approach, authorities appear to be continuing with the same strategy.

At a recent Pakistan Business Council conference in Islamabad, the SIFC’s national coordinator suggested a shift in focus.

He admitted that foreign investors are unlikely to invest in Pakistan unless domestic investors regain confidence.

To address this, he indicated that the government would offer greater support to large local business groups.

Analysts, however, argue that this approach misses the real issue. They say that offering special concessions to a small group of influential investors only reinforces the unequal business environment that has discouraged investment for decades.

Rather than fixing systemic flaws, such measures are seen as deepening existing distortions.

Pakistan’s economic system has long relied on selective incentives, where well-connected businesses receive relief and privileges while the broader private sector struggles with red tape, unpredictable taxes and frequent policy changes.

Critics believe the SIFC has institutionalised this model by creating a parallel channel that bypasses regular processes instead of improving them.