Pakistan Sees Growing Foreign Investor Interest as FDI Rises 24%

Pakistan is seeing increased interest from international investors across sectors including mining, technology, agriculture, oil and gas, refinery upgrades and privatisation, according to Finance Minister Muhammad Aurangzeb, as the government tries to convert recent macroeconomic stabilisation into private-sector investment.

Speaking to members of the Overseas Investors Chamber of Commerce and Industry (OICCI) in Karachi, Aurangzeb said investors from Saudi Arabia, Türkiye and other international markets were examining opportunities in Pakistan.

He specifically referred to Turkish investor interest in the privatisation of electricity distribution companies, while saying Saudi and other international investors were looking at a wider range of sectors.

However, the finance minister also cautioned that investor interest does not immediately translate into actual capital inflows.

Foreign investment requires policy continuity, predictable regulations, project preparation and effective facilitation before discussions turn into completed transactions.

That distinction is particularly important for Pakistan because State Bank data show an improvement in foreign direct investment at the start of FY2026-27, but actual inflows remain modest relative to the size of the economy.

Foreign Direct Investment Rises 24% in First Two Months of FY27

Pakistan received approximately $494.5 million in net foreign direct investment during July and August 2026, according to State Bank data.

That was around 24% higher than the $398.6 million received during the same period of the previous fiscal year.

August was particularly strong.

Net FDI reached approximately $315.9 million during August 2026, compared with about $175 million in August 2025.

That represented year-on-year growth of more than 80%.

The August figure was also around 77% higher than the inflow recorded in July.

This provides some quantitative support for the government’s claim that investor engagement is improving.

But two months of stronger inflows do not yet establish a sustained investment boom.

China Remains Pakistan’s Largest FDI Source

China remained the largest source of foreign direct investment during the first two months of FY27.

Chinese investment reached approximately $176 million in July-August 2026, up from around $120.7 million during the same period a year earlier.

The United Arab Emirates also increased its investment.

UAE-linked FDI reached approximately $58 million, compared with $35 million during July-August of the previous fiscal year.

During August alone, China contributed around $113 million, while Canada provided roughly $50 million and the UAE approximately $48 million.

Power and financial services were among the sectors receiving the largest investment flows during the month.

Stronger FDI Comes After a Difficult FY26

The improvement needs to be viewed against a weak base.

Pakistan’s foreign direct investment dropped sharply during FY2025-26.

Dawn reported that total FDI fell approximately 49% to $1.077 billion in FY26, down from around $2.122 billion in FY25.

The final months of FY26 were affected by heightened geopolitical uncertainty in the Gulf region as well as domestic economic concerns.

This means the 24% increase seen during July-August FY27 represents an encouraging reversal, but Pakistan would need sustained inflows over many months to recover the investment lost during the previous fiscal year.

Investor Interest Is Not the Same as FDI

This is one of the most important distinctions for interpreting Aurangzeb’s comments.

Investors can express interest in Pakistan without immediately investing money.

There are several stages between an initial meeting and a completed foreign investment.

These can include:

• Initial discussions
• Project feasibility studies
• Due diligence
• Regulatory approvals
• Financing arrangements
• Land and infrastructure agreements
• Commercial negotiations
• Government approvals
• Final investment decisions
• Actual capital deployment

The finance minister himself acknowledged that international investment can take time to materialise.

Pakistan’s challenge is therefore to convert meetings and expressions of interest into completed projects that show up in State Bank FDI data.

Mining and Minerals Attract Growing Attention

Mining and minerals are among the sectors the government increasingly presents to international investors.

Aurangzeb said foreign investors are showing interest in this area alongside energy, technology and agriculture.

The Finance Ministry has also repeatedly identified mining and minerals as an important sector for attracting regional and international capital.

Its recent investor outreach has highlighted potential investment in infrastructure, energy, utilities, mining, oil and gas and technology.

Pakistan has significant mineral resources, including copper and gold deposits, but large-scale mining projects generally require substantial upfront investment, infrastructure and long development timelines.

Investor interest therefore needs to be evaluated through actual project commitments rather than announcements alone.

Saudi Investors Are Looking at Multiple Sectors

Aurangzeb said Saudi and other international investors were showing increasing interest across several parts of Pakistan’s economy.

The Finance Ministry has separately highlighted potential Saudi-linked investment in:

• Infrastructure
• Energy
• Oil and gas
• Utilities
• Mining and minerals
• Technology
• Blockchain and digital sectors

Saudi Arabia has become an important focus of Pakistan’s foreign-investment strategy as Islamabad seeks to move its economic relationships with Gulf countries beyond deposits and financial assistance toward direct commercial investment.

However, individual investment projects should only be counted as FDI when capital is actually deployed.

Turkish Investors Interested in Power Distribution Companies

The finance minister also pointed to Turkish investor interest in Pakistan’s planned privatisation of electricity distribution companies.

Pakistan has been trying to reduce the government’s role in commercial enterprises while attracting private capital into state-owned companies and infrastructure.

Electricity distribution companies, commonly known as DISCOs, have been part of the government’s broader restructuring and privatisation agenda.

The government hopes that private-sector participation could improve efficiency, reduce losses and bring additional investment into power infrastructure.

Aurangzeb’s comments indicate that Turkish investors are examining some of these opportunities.

Interest, however, does not mean a sale or investment has yet been completed.

Final outcomes will depend on the privatisation structure, financial condition of individual companies, regulatory framework and investor bids.

Pakistan Wants Private Sector to Lead the Next Phase of Growth

Aurangzeb’s broader message was that Pakistan’s next phase of economic expansion should be driven primarily by private businesses rather than government spending.

He told OICCI members that the government’s role should be to create:

• A predictable policy environment
• Effective regulation
• Investment facilitation
• Access to financing
• A supportive business ecosystem

while private businesses should take the lead in investment, job creation and productive capacity.

The same message has featured prominently in Finance Ministry statements during recent meetings with global investors.

At a J.P. Morgan conference in London in September, Aurangzeb said public-sector balance sheets alone could not finance Pakistan’s next growth phase and that domestic and international private capital would have to play a larger role.

55 Global Investment Funds Engaged With Pakistan in London

Recent investor outreach provides another indication of interest.

According to the Finance Ministry, representatives of 55 global investment funds engaged with Pakistan’s delegation during a J.P. Morgan Emerging and Frontier Markets Opportunities Conference in London on September 18.

The discussions included one-on-one meetings and a broader investor session covering:

• Pakistan’s economic outlook
• Investment opportunities
• Structural reforms
• Capital-market development
• External financing
• Private-sector growth

The number of participating funds shows increased engagement from the global investment community.

But participation in an investor conference is still different from actual FDI.

The more important indicator over time will be whether those conversations translate into projects, portfolio allocations, acquisitions or new businesses.

More Than 250 Investors Joined Earlier Jefferies Session

The government’s engagement with international investors has not been limited to London.

In April 2026, the Finance Ministry said more than 250 participants representing global institutional investors joined a virtual session organised with Jefferies Financial Group.

The meeting focused on Pakistan’s macroeconomic position, reform programme and investment opportunities.

These repeated interactions suggest international investors are again examining Pakistan after several years of severe macroeconomic instability.

The challenge is maintaining that interest long enough for capital commitments to follow.

BII Has Also Explored Additional Investment

British International Investment has separately discussed expanding its Pakistan exposure.

A BII delegation met Aurangzeb in September to discuss possible investment in:

• Infrastructure
• Climate finance
• Private equity
• SME financing
• Renewable energy
• Power transmission

The Finance Ministry said BII expressed interest in identifying viable investment opportunities and mobilising greater private capital.

Development finance institutions such as BII can play an important role because their participation may reduce risk for other private investors entering emerging markets.

Capital Markets Are Part of the Investment Strategy

Pakistan is also trying to attract investment through its capital markets rather than relying entirely on conventional foreign direct investment.

Aurangzeb has argued that the country needs deeper equity, corporate debt, private-equity, venture-capital and sukuk markets.

The Finance Ministry says the government is working to:

• Increase IPO activity
• Broaden investor participation
• Improve capital-market infrastructure
• Develop private-equity structures
• Expand Islamic finance
• Attract foreign participation

This matters because FDI is only one form of foreign capital.

International investors can also participate through equities, government securities, corporate debt, private equity and other financial instruments.

Foreign Portfolio Investment Has Also Improved

Foreign portfolio flows have shown improvement alongside FDI.

According to Finance Division economic reporting, Pakistan received around $67.7 million in portfolio investment during July-August FY27, compared with an outflow of approximately $86.6 million during the same period a year earlier.

Combined foreign investment reached around $562.2 million, an increase of more than 80% year-on-year.

Portfolio investment is different from FDI because investors can generally enter and exit financial markets more quickly.

That makes it useful for capital-market development but potentially more volatile than investment in factories, mines or infrastructure.

Pakistan Has Returned to International Capital Markets

The government also points to Pakistan’s recent international bond activity as evidence that overseas investor confidence has improved.

The Finance Ministry says Pakistan has regained access to global capital markets through instruments including:

• A Panda Bond
• A $3 billion dual-tranche Eurobond transaction

The ministry reported strong investor demand for these issuances.

Sovereign bond demand is not the same as foreign direct investment.

Investors buying government debt are assessing Pakistan’s ability to repay sovereign obligations, whereas FDI investors are committing capital to businesses and productive assets.

Still, successful bond issuance can improve perceptions of market access and country risk.

PIA Transaction Shows Domestic Capital Formation

Aurangzeb also used the PIA transaction as an example of Pakistani businesses’ ability to mobilise capital.

He said major local business groups demonstrated their capacity to work together and collectively mobilise close to $1.2 billion.

His broader argument was that Pakistan should not depend entirely on foreign investors.

Domestic investors, pension funds, businesses, banks and retail investors also need to contribute to capital formation.

A stronger domestic investment base can potentially make Pakistan more attractive to foreign investors by demonstrating that local businesses are willing to commit their own capital.

Government Says Pakistan Has Moved From Stabilisation Toward Growth

Aurangzeb said Pakistan had moved from a period of economic contraction and crisis management toward stabilisation and renewed growth.

This is also the government’s central message in its international investor presentations.

Finance Ministry statements describe:

• Fiscal consolidation
• Improved foreign-exchange reserves
• Better access to capital markets
• Structural reforms
• Privatisation
• Tariff rationalisation
• Energy-sector reforms

as foundations for a more sustainable growth model.

These are government assessments.

Investors will ultimately judge the sustainability of that progress through factors such as economic growth, inflation, taxation, exchange-rate stability, profitability and the consistency of regulation.

Policy Continuity Remains Crucial

The finance minister specifically stressed the importance of policy continuity.

Foreign investors making long-term commitments need confidence that rules will not change abruptly after they have invested.

For example, a company building a factory may make financial assumptions covering 10 or 20 years.

Unexpected changes in:

• Taxes
• Import duties
• Energy pricing
• Currency controls
• Profit repatriation rules
• Sector regulations

can materially change a project’s economics.

This is why investors often place as much importance on regulatory predictability as they do on tax incentives.

Profit Repatriation Matters to Foreign Investors

Foreign companies also need confidence that they can transfer legitimate profits and dividends outside Pakistan.

SBP data show foreign investors repatriated approximately $261.4 million in profits and dividends during July 2026.

That was lower than the $295 million repatriated during July 2025.

The ability to repatriate profits is important because previous foreign-exchange shortages created delays and uncertainty for multinational companies operating in Pakistan.

Improved foreign reserves and smoother payments can therefore strengthen investor confidence.

Pakistan Still Faces an Investment Gap

Despite the government’s optimism, Pakistan’s actual FDI remains relatively small.

Even the improved $494.5 million received during the first two months of FY27 is modest compared with the financing requirements of a country with a population exceeding 240 million and large infrastructure needs.

Pakistan requires significant investment in areas including:

• Energy
• Transport
• Mining
• Manufacturing
• Technology
• Water
• Agriculture
• Housing
• Export industries

The objective is therefore not simply to restore FDI to previous levels but to raise investment substantially over the longer term.

Domestic Investment Is Equally Important

Aurangzeb emphasised that Pakistan cannot build sustainable growth around foreign investment alone.

Domestic businesses must also invest.

This is particularly important because foreign investors often examine the behaviour of local businesses before committing capital.

If Pakistani companies are delaying expansion, moving capital abroad or avoiding long-term projects, foreign investors may interpret that as a warning about the domestic business climate.

A durable investment recovery therefore requires both domestic and international capital formation.

Tax Base Expands to 5.7 Million Filers

The finance minister also highlighted growth in Pakistan’s tax-filing population.

He said the number of tax filers had increased to more than 5.7 million, compared with around 3.9 million last year and approximately 1.8 million to 1.9 million in 2022.

The government considers tax-base expansion important because stronger domestic revenues can reduce dependence on borrowing and create more stable fiscal conditions.

For investors, fiscal sustainability matters because persistent large deficits can contribute to:

• Higher interest rates
• Currency pressure
• Additional taxation
• Macroeconomic instability

The quality and composition of tax collection are therefore as important as the number of registered filers.

Housing Finance Has Reached Around Rs60 Billion

Aurangzeb also referred to the Prime Minister’s Apna Ghar Programme, saying banks had already provided around Rs60 billion in financing, with additional approved loans in the pipeline.

He argued that financing availability was becoming less of a constraint and that greater attention now needed to be paid to the supply side.

In practical terms, available housing credit only generates broader economic activity if developers and builders can provide homes.

Construction can create demand across numerous industries, including:

• Cement
• Steel
• Glass
• Paint
• Electrical equipment
• Sanitary products
• Furniture
• Labour

The government is therefore treating housing finance as part of its wider private-sector growth strategy.

Mining, Technology and Agriculture Could Diversify FDI

Pakistan’s foreign direct investment has historically been concentrated in a relatively small number of sectors.

The government’s attempt to attract investment into mining, digital technology, agriculture and value-added industries is intended to diversify that pattern.

Greater diversification could reduce dependence on investment linked only to power projects or traditional infrastructure.

Technology investment can support exports of services.

Mining can generate foreign exchange if projects reach commercial production.

Agricultural investment could improve productivity and value-added exports.

But each sector also requires different regulatory structures and risk-management frameworks.

Energy and Refinery Upgrades Offer Large Investment Needs

Aurangzeb also highlighted interest in oil and gas and refinery upgrades.

Pakistan’s energy infrastructure requires substantial capital.

Older refineries may need major upgrades to improve product quality, efficiency and environmental standards.

Oil and gas exploration requires expensive drilling and geological work with uncertain outcomes.

Power and transmission projects also require long-term financing.

These characteristics make energy one of the sectors most capable of attracting large individual investments — but also one of the sectors where policy stability is particularly important.

Investment Interest Does Not Eliminate Economic Risks

Pakistan continues to face several risks that could influence foreign-investment decisions.

These include:

• Geopolitical tensions in the Middle East
• High international oil prices
• Double-digit domestic inflation
• Security concerns
• A widening merchandise trade deficit
• Energy-sector circular debt
• Policy execution risks

The government’s own investor outreach frequently acknowledges that Pakistan remains exposed to external shocks.

Recent FDI growth therefore needs to continue despite these risks before a clear long-term trend can be established.

Pakistan’s External Account Is Improving but Still Under Pressure

Pakistan’s current-account deficit narrowed to $98 million in August 2026, compared with $342 million a year earlier.

For July-August combined, exports increased, but imports grew more rapidly as domestic demand and energy costs increased.

Stronger workers’ remittances have helped offset the wider goods trade deficit.

This matters for investment because a stable external account reduces the risk of foreign-exchange restrictions and currency instability.

Foreign investors generally prefer markets where they have confidence that foreign currency will remain available for imports, debt servicing and profit repatriation.

Investor Interest Must Translate Into Projects

The government’s immediate challenge is therefore execution.

Pakistan has attracted numerous delegations, investment conferences and expressions of interest over the past several years.

The more meaningful test is whether those discussions result in:

• Factories being constructed
• Mines entering development
• Technology companies expanding
• Privatisation transactions closing
• Power assets receiving investment
• International companies increasing local production
• Export capacity expanding

Announcements can improve confidence, but only capital expenditure and actual FDI create new productive assets.

What Investors Will Watch Next

Several indicators will show whether Pakistan’s investment story is genuinely strengthening.

The most important include:

Monthly FDI: Continued year-on-year growth beyond the first two months of FY27.

Large investment closures: Confirmed deals in mining, energy, infrastructure and technology.

Privatisation: Progress on DISCOs and other state-owned enterprises.

Profit repatriation: Continued ability of investors to transfer dividends.

Exchange-rate stability: Reduced volatility lowers investment risk.

Tax and tariff policy: Investors will watch whether reforms remain predictable.

Security: Domestic and regional security developments remain significant.

Economic growth: Stronger demand can make investment projects more commercially attractive.

Important Distinction: Investor Interest vs Investment

The central claim in the Dawn report is that investor interest is growing.

That statement is supported by the government’s increasing engagement with global funds, development institutions and regional investors.

The Finance Ministry says 55 major investment funds engaged with its delegation at the recent J.P. Morgan conference, while more than 250 global investor representatives participated in an earlier Jefferies session.

State Bank data also show that FDI rose 24% during July-August FY27.

But Pakistan is recovering from a year in which FDI nearly halved.

The most accurate conclusion is therefore that both investor engagement and short-term FDI data have improved, but a sustained investment recovery has not yet been established.

Bottom Line

Finance Minister Muhammad Aurangzeb says Pakistan is seeing growing international investor interest in mining, minerals, technology, agriculture, oil and gas, refinery upgrades and privatisation, including interest from Saudi and Turkish investors.

Recent State Bank figures provide some evidence that actual investment flows are also improving.

Pakistan received approximately $494.5 million in FDI during July-August FY27, up 24% from $398.6 million a year earlier, while August alone attracted $315.9 million — more than 80% higher year-on-year.

However, the recovery follows a difficult FY26 in which annual FDI fell sharply to around $1.077 billion.

Investor meetings and expressions of interest therefore represent an encouraging signal rather than proof that Pakistan has already entered a major foreign-investment boom.

The next test will be whether policy continuity, privatisation, regulatory reforms and improved macroeconomic conditions can convert that interest into completed projects and sustained capital inflows over the remainder of FY27.