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Why is foreign investment shrinking in Pakistan? Reason is worsening security climate
The annual OICCI Security Survey 2026 persistent law and order issues remain a significant obstacle to attracting investment in Pakistan.
Foreign investment in Pakistan is shrinking as the worsening security environment, particularly in Karachi and the country's western regions, continues to undermine investor confidence and disrupt business operations.
According to the latest security survey conducted by the Overseas Investors Chamber of Commerce and Industry (OICCI), security has become one of the three biggest concerns among foreign investors in Pakistan, with the leadership of 71 per cent of member companies citing it as a concern, The Express Tribune reported.
The annual OICCI Security Survey 2026, conducted in June among major foreign investors operating in Pakistan, found that respondents said persistent law and order issues remain a significant obstacle to attracting investment and expanding business activity.
Worsening security perception in several areas of Pakistan
The survey highlighted worsening security perceptions in several regions.
- Around 42 per cent of respondents said the security situation in Karachi had worsened.
- An overwhelming 81 per cent in Quetta and 86 per cent across the rest of Balochistan reported a decline in overall security conditions.
- Businesses also reported growing concerns over employee safety during daily commutes, particularly in Karachi and Quetta, reflecting the broader impact of insecurity on routine operations.
- Street crime remained the leading concern for businesses. Half of the surveyed companies reported an increase in street crime in Karachi compared to the previous year, while Quetta also witnessed a notable rise in such incidents.
- Overall, nearly one-third of respondents said the security environment affecting their businesses had worsened compared to last year.
Low confidence in law enforcement
According to the survey, confidence in law enforcement has also declined in Pakistan. Positive assessments of the Karachi Police and Sindh Police declined significantly from the previous survey, while respondents expressed relatively greater confidence in the Sindh Rangers and the Khyber Pakhtunkhwa Police.
The Express Tribune reported that businesses have also cited illegal demands for payment by law enforcement officers in the survey, alongside concerns over expatriate security and recurring protests, as major operational challenges.
Regional instability, driven by factors beyond the control of Pakistan’s government or security establishment, has further compounded business risks in the country. Nearly 88 per cent of surveyed companies said the war between the US and Iran and the wider tensions in West Asia that it brought with it had affected their operations. Supply chain disruptions emerged as the biggest concern, followed by reduced commercial activity and employee safety, as reported by The Express Tribune.
