Foreign investment & exchange control

This chapter states the position as of April 2026. It is general information, not legal advice. Exchange control practice shifts with market conditions, so verify the current position before relying on any repatriation step.

The framework

Pakistan's inward investment regime rests on a small number of instruments. The Foreign Private Investment (Promotion and Protection) Act, 1976 guarantees repatriation of capital and profits for approved foreign investment. The Protection of Economic Reforms Act, 1992 protects foreign currency accounts and reinforces those guarantees. Exchange control itself sits in the Foreign Exchange Regulation Act, 1947, administered by the State Bank of Pakistan (SBP) through its Foreign Exchange Manual and circulars. Day-to-day transactions run through commercial banks acting as authorised dealers; the SBP is approached directly only where the Manual requires it.

Investment policy is set by the federal government, historically through the Board of Investment (BOI). Since 2023 the Special Investment Facilitation Council (SIFC) has operated as a federal body to channel and expedite large investments, particularly in agriculture, mining, energy, and information technology. For most ordinary investments the SIFC changes nothing procedurally; the SECP, SBP and FBR processes described in this guide still apply.

What a foreigner may own

The starting point is permissive. Foreign investors may own 100 per cent of a Pakistani company in most sectors, without prior government approval for the investment itself. There is no general screening regime of the CFIUS type as of early 2026.

The exceptions are sectoral. Banking requires SBP licensing and fit-and-proper clearance. Insurance is licensed by the SECP and has its own capital and shareholding rules. Broadcast media is subject to PEMRA licensing with restrictions on foreign control. Airlines, agricultural land, and certain security-sensitive activities carry ownership or approval conditions [current sectoral caps and conditions — TO BE VERIFIED BY REVIEWING LAWYER]. Land ownership by foreign nationals and foreign-controlled companies is regulated at the provincial level and deserves early attention in any project involving real estate.

Investments from certain jurisdictions attract additional scrutiny in security clearance (see Chapter 1). Investors from India face specific restrictions [current position — TO BE VERIFIED BY REVIEWING LAWYER].

Getting money in

Equity comes in through the banking channel. The foreign shareholder remits the subscription amount in foreign currency to the company's bank account in Pakistan. The authorised dealer converts it and issues confirmation of the inward remittance. The issue of shares to the non-resident is then reported to the SBP through the authorised dealer under the relevant chapter of the Foreign Exchange Manual [Chapter 20 in the current edition — TO BE VERIFIED BY REVIEWING LAWYER], together with the SECP's return of allotment.

This reporting is not a formality to defer. The record of inward remittance and reported allotment is what establishes repatriable status. Dividends and sale proceeds flow out later against this record. Investments that arrive outside banking channels, or share issues never reported, create repatriation problems that are expensive to fix and sometimes cannot be fixed at all.

Shares may in some cases be issued against consideration other than cash — imported plant and machinery, or capitalisation of certain payables — subject to conditions in the Manual and, where applicable, SBP approval [scope and conditions — TO BE VERIFIED BY REVIEWING LAWYER].

Getting money out

Dividends. A company may remit dividends to foreign shareholders through its authorised dealer without prior SBP approval, provided the underlying investment is on a repatriable basis and the documentary requirements are met: audited accounts, board resolution declaring the dividend, tax deduction evidence, and the auditor's certification. Withholding tax applies (see Chapter 3), subject to treaty relief.

Capital and sale proceeds. Disinvestment proceeds are remittable on the same repatriable-basis logic. For listed shares the market price governs. For unlisted shares the authorised dealer requires a valuation — in practice a breakup value certificate from a chartered accountant — and prices exceeding the certified value may require SBP approval [current valuation rules and approval thresholds — TO BE VERIFIED BY REVIEWING LAWYER]. Chapter 6 of this guide covers exits in detail.

Royalties, franchise and technical fees. Remittance of these payments is permitted subject to conditions that have historically included registration of the agreement and, in some sectors, caps on rates and duration [current BOI/SBP requirements by sector — TO BE VERIFIED BY REVIEWING LAWYER]. Draft the intercompany agreement with the remittance rules in view, not after the first invoice.

A practical note. Pakistan has gone through periods of foreign exchange scarcity, most recently in 2022 and 2023, during which banks queued and delayed outward remittances including dividends. The legal entitlement to repatriate did not change; the practical timeline did. As of early 2026 conditions have eased, but boards planning distributions should ask their bankers about current processing times rather than assume the Manual's position operates without friction [current market conditions — TO BE VERIFIED BY REVIEWING LAWYER].

Foreign borrowing

A Pakistani company may borrow in foreign currency from abroad, including from its parent, within the framework the SBP prescribes for private sector foreign currency loans. The framework governs eligible borrowers and lenders, permitted pricing ceilings, tenors, and registration of the loan with the SBP through the authorised dealer [current framework and pricing caps — TO BE VERIFIED BY REVIEWING LAWYER]. Registration is what enables remittance of interest and principal. An unregistered shareholder loan is, for repatriation purposes, close to worthless; treat registration as a condition of drawdown.

Local currency borrowing by foreign-controlled companies is broadly available from Pakistani banks, subject to the banks' own credit and compliance requirements.

Incentives and special regimes

The Special Economic Zones Act, 2012 offers zone enterprises exemptions including customs duty relief on capital goods and income tax holidays for prescribed periods [current incentive package — TO BE VERIFIED BY REVIEWING LAWYER]. Export-oriented manufacturers may use the Export Facilitation Scheme administered by the FBR, which consolidates earlier duty-suspension regimes. Information technology exporters benefit from a concessional final tax regime on export proceeds (see Chapter 3). Each regime has qualification and compliance conditions; the benefit is real but so is the paperwork.

What this means in practice

Three habits protect a foreign investment in Pakistan. Bring every rupee in through the banking channel and keep the bank's confirmations. Report every allotment and register every loan with the SBP promptly through the authorised dealer. And keep the corporate and tax records that the outbound leg will one day require — dividend remittances and exit proceeds are approved on documents, and the documents are created years earlier, at the moment the money comes in.