June 17, 2023
2 mins read

Shell’s exit sparks domino effect fears in Pakistan

The oil major’s announcement might set the ball rolling for other foreign investors too to look at exiting Pakistan or halting operations temporarily, a report by Mahua Venkatesh

Pakistan’s economic crisis is further deepening with Shell Pakistan announcing the exit of oil major Shell Petroleum Company from the South Asian nation after 75 years. This has come as a big blow to the country which is struggling to attract investment to boost its economy. The announcement might set the ball rolling for other foreign investors too to look at exiting the country or halting operations temporarily.

Either way this will make the road to economic recovery even tougher for the cash starved nation. As more and more companies exit or downsize their operations in Pakistan, the level of unemployment will only rise.

Almost all multinational companies have run into huge losses due to massive depreciation in the Pakistani rupee. Earlier car manufacturer Honda announced halting operations.

The oil sector is one of the worst affected by the ongoing crisis. That apart, the pharmaceutical and automobile sectors have also been brutally impacted.

According to local news organisation Daily Duniya, Pakistan’s foreign direct investment (FDI) fell by 23 per cent this year to touch $17 billion compared to the previous year. The largest share of FDI poured into Pakistan from China. But in the last few months, China’s investments into Pakistan have been thinning with the rising political uncertainty in the country.

Import restrictions and dwindling foreign exchange reserves have added to the problem. To save forex reserves, the State Bank of Pakistan-the country’s central bank-has imposed stringent restrictions which have made it tough for the MNCs to remit dividends to shareholders outside the country.

The sharp depreciation of the Pakistani rupee has also led to a massive erosion of the value of the dividends.

“The country needs to provide an investor friendly business regime to attract foreign direct investment..this includes a stable political and security environment too. But the situation in Pakistan is just the opposite,” an analyst told India Narrative. The analyst added that the situation is getting worse. “There is no hope that the situation will improve anytime soon,” he added.

Pakistan Business Council (PBC) CEO Ehsan Malik earlier told the Express Tribune that the delay in remittances sends a “very negative signal to the potential (foreign) investors.”

(The content is being carried under an arrangement with indianarrative.com)

ALSO READ: Shehbaz asks Nawaz to return, become PM

Previous Story

Over 100 foreign nationals arrested in UK immigration sweep

Next Story

UNICEF in talks with Taliban over handover of education programmes

Latest from -Top News

Piyush Goyal Heads to Doha for Trade Talks

During the visit, both sides are expected to discuss the proposed India–Qatar Free Trade Agreement (FTA)….reports Asian Lite News Union Commerce and Industry Minister Piyush Goyal will travel to Doha, Qatar, on

Jaishankar Hints at Tariff Deal with US

Jaishankar explained that the ongoing trade tensions largely stem from the inability of both sides to reach a common ground on several issues….reports Asian Lite News External Affairs Minister S. Jaishankar on

Rajnath Singh Heads to Australia for Key Defence Talks

The visit comes at a historic moment when India and Australia commemorate five years of establishment of India-Australia Comprehensive Strategic Partnership…reports Asian Lite News Defence Minister Rajnath Singh will visit Australia from

California Takes Trump to Court

Trump claimed that the deployment of federalized troops was necessary because the city of Portland was under siege…reports Asian Lite News California Governor Gavin Newsom said the state will sue the Trump

Hamas Heads to Egypt for Gaza Talks

The negotiation will focus on the details of enacting the first phase of the plan…reports Asian Lite News A delegation from the Palestinian group Hamas arrived in Egypt on Sunday ahead of
Go toTop

Don't Miss

Breather for Pak media

The media bodies had challenged the “draconian law” in the

Afghan Crisis Spills Into Pakistan

Over 370,000 Afghans reportedly left Pakistan since October 1, following