Islamabad(The COW News Digital)Pakistan continues to hold the lowest investment-to-GDP ratio in Asia, despite relative macroeconomic stability and government efforts to attract foreign and domestic capital. According to recent analyses, Pakistan’s investment as a percentage of GDP stood at 13.8 percent, significantly lower than Bangladesh at 22.4 percent, and well below India and Vietnam, which maintain levels exceeding 30 percent.
Experts say the low investment rate is driven by structural bottlenecks, regulatory hurdles, and persistent trade deficits. Although the government has established a high-level Investment Facilitation Council to streamline approvals, basic structural challenges remain. Initiating industrial projects often requires approvals from approximately 25 federal and provincial agencies, causing delays and uncertainty for investors.
Industry leaders have expressed private frustration with the council’s effectiveness, highlighting a gap between policy announcements and practical implementation. “Regulations can guide human development, but they can also discourage innovation and new ideas,” said a senior business official, underscoring the need for reforms that foster entrepreneurial growth.
Analysts note that Pakistan continues to offer traditional investment opportunities, largely limited to memorandums of understanding (MOUs), rather than binding agreements or project-specific investments that secure long-term capital inflows. This approach contrasts sharply with regional peers, which maintain higher investment levels despite political or economic shocks.
According to Maryam Ayub, a research economist at the Policy Research Institute of Market Economy (PRIME), Pakistan’s low investment levels reflect deep structural disconnections. “Other economies in the region sustain investment even amid disruptions. Pakistan’s lag is not temporary—it indicates fundamental internal barriers,” she said.
Economic observers also point out that trade deficits and a cumbersome business environment contribute to the persistent investor hesitancy. While the government has introduced incentives for foreign investment, inconsistencies in policy implementation and bureaucratic inefficiency limit their effectiveness.
The outlook underscores the urgent need for Pakistan to address regulatory inefficiencies, streamline approvals, and provide clear, predictable investment policies. Without such reforms, the country risks remaining a lower-priority destination for regional and global investors.
Despite these challenges, some experts argue that targeted reforms and public-private collaboration could unlock growth potential. Improving infrastructure, reducing red tape, and facilitating transparent investment channels are considered essential steps toward boosting the investment-to-GDP ratio and accelerating economic development.
