Pakistan’s controversial firewall system has left the country’s internet performance slow and unstable, leading businesses and industry groups to warn of a mass exodus of foreign companies from the country.
The warning by the Pakistan Business Council (PBC) and Pakistan Software Houses Association (PSHA) comes months after major companies including Uber, Pfizer, Shell, Eli Erie (US), Sanofi (France), Telenor (Norway) and Lott Chemical (South Korea) sold all or part of their stakes to local companies.
The move marks a major outflow of foreign investment and raises questions about Pakistan’s investment climate, economic policies and regulatory hurdles.
“Due to the reported implementation of the firewall causing widespread internet disruptions across the country, many multinational companies (MNCs) are planning to or have already relocated their back offices out of Pakistan,” the PBC said in a statement.
Leading financial analyst Sarwat Ali said the digital economy is essential for the economic growth of any country.
“Pakistan is already facing economic challenges with rising unemployment and slowing growth, so investors and businesses need not feel anxious about the future of their digital/outsourcing businesses,” he added.
A recent report said nine ultra-rich multi-million dollar companies have sold assets in Pakistan in the past two years, highlighting a major setback for the country’s economy.
The withdrawal of businesses, including from several key sectors, reflects wider concerns over the issue of internet freedom in Pakistan and the infrastructure to provide the best facilities for businesses.
According to the PBC, last year, Dubai Chamber of Commerce and Industry registered 8,036 new Pakistani companies and this figure rose to 3,968 in the first six months of 2024, making Pakistan the second-highest country on the list.
This migration reflects a growing lack of confidence in the government’s economic policies. Key factors contributing to this lack of confidence include high business costs, political instability, rising electricity prices and a worsening security situation.
The technology industry has already expressed serious concerns about the recent internet slowdown.
PSHA also warned that the implementation of the national firewall could lead to prolonged internet connectivity and erratic performance of virtual private networks, threatening a “total collapse of business operations,” causing the country to lose nearly $300 million or more per month. The country recorded IT exports of $298 million in June, up 33 percent from a year ago. For the fiscal year that ended in June, IT exports were $3.2 billion, up 24 percent from $2.5 billion in fiscal 2023.
The Overseas Investors Chamber of Commerce and Industry (OICCI) also warned that frequent internet outages in Pakistan could hinder the country’s economic development.
