Pakistan’s missing multinationals

Pakistan boasts a number of highly successful business families, operating across various sectors such as textiles, cement, fertilizers, pharmaceuticals, automobiles, banking, property, and energy. These entrepreneurs have built substantial enterprises and amassed considerable fortunes over several generations. However, a notable question persists in Islamabad's boardrooms and Karachi's drawing rooms: where are Pakistan's multinational corporations?

Why are there no Pakistani companies expanding into international markets, acquiring businesses abroad, or establishing a presence in North America and Europe? Despite over seven decades of industrial history, Pakistan has only a limited number of companies that can compete globally. The challenge is that building a successful company domestically is different from creating a multinational corporation that can operate effectively in foreign markets.

While Pakistan has a tradition of exporting goods like textiles, sporting goods, surgical instruments, rice, and leather products worldwide, achieving success abroad requires a different set of skills and capabilities. According to the UN Conference on Trade and Development's World Investment Report 2025, Pakistan's outward foreign direct investment in 2024 was only $153 million, compared to $2.57 billion in inward FDI.

This ratio highlights the stark gap between Pakistan's export-based economy and its potential to develop globally competitive enterprises. There are some exceptions, such as Lucky Cement, which has built manufacturing operations in Iraq and the Democratic Republic of Congo. This demonstrates that Pakistani industrial groups can indeed invest and compete overseas.

However, the question remains: why aren't more Pakistani firms internationalizing? The difference between owning property abroad and building a company there is substantial. While owning property signifies wealth preservation, building a company overseas tests a firm's capabilities and competitiveness in a foreign market. Competing in countries like Britain, Europe, or North America entails facing unfamiliar regulations, higher costs, sophisticated customers, established competitors, and demanding governance standards.

Family reputation does not hold much weight in international markets, and political connections at home become irrelevant. International expansion serves as a crucial test of whether success is truly transferable or merely localized. While it would be unfair to claim that Pakistani industrialists have solely prospered through protectionism or connections, building a major company in Pakistan is undeniably challenging.

Economic factors such as political instability, energy shortages, currency depreciation, expensive financing, inconsistent regulation, and repeated economic crises all contribute to the difficulty. Resilience at home does not guarantee competitiveness abroad. Some industries benefit from domestic advantages like import barriers, cheap labor, concentrated markets, licenses, and established networks, which are not transferable to international markets.

The success of Pakistani-origin entrepreneurs and technology professionals abroad serves as a useful contrast. These individuals have built considerable success in Britain, North America, and the Gulf through their qualifications, savings, or innovative ideas in markets that offer no protection or influential connections. The lesson is clear: Pakistan possesses entrepreneurial talent but lacks the environment and ambition to transform this talent into globally competitive enterprises at home.

The next generation of Pakistan's established business families has a real opportunity to build on their inherited capital, industrial platforms, networks, and infrastructure. While preserving this inheritance is a responsible approach, it should not be the ultimate ambition. If they inherit a textile business, why not aim to become a supplier to international brands rather than solely to domestic companies?

If they inherit a pharmaceutical company, why limit its presence to Pakistan? If their family controls an industrial group, why not acquire technology or distribution networks abroad? The question arises: why do family homes in affluent neighborhoods count for more than companies headquartered in those locations? Imagine Pakistani firms bidding for British, European, and North American businesses, possessing internationally recognized brands, and employing thousands of employees across continents.

This represents a significant shift in Pakistan's economic confidence. However, this transformation cannot be achieved by individual firms alone. Policymakers must differentiate between capital flight and productive outward investment. Moving personal wealth abroad to protect it is one thing; a Pakistani company investing overseas to acquire customers, technology, or productive capacity is entirely different.

Successfully pursuing the latter can yield dividends, expertise, and networks that contribute to Pakistan's own economic growth. Commercial diplomacy should recognize the distinction between these two approaches.