KARACHI: The Pakistan Business Council (PBC) warned on Friday that several multinational companies are planning to relocate their back offices from Pakistan, with many having already done so recently.

The warning came amid a report by the Dubai Chamber of Commerce that 3,968 Pakistani companies registered in Dubai between January and June 2024 — making Pakistan the second-ranked country on the list. The figure was also 17 per cent higher than the 3,395 firms registered during the same period in 2023.

Last year, the Dubai Chamber of Commerce registered 8,036 new Pakistani businesses.

The surge in Dubai-based Pakistani businesses highlights a growing exodus from a country already grappling with severe unemployment and sluggish economic growth. As hundreds of thousands of skilled and unskilled workers have already left Pakistan, millions more are reportedly seeking opportunities abroad.

Says high-speed connectivity vital for domestic economy

“Many multinational companies (MNCs) are either planning to relocate their back offices from Pakistan or have already done so, as the reported imposition of a firewall causes widespread internet disruptions across the country,” the PBC said in a statement.

This migration reflects a deepening lack of confidence in the government’s economic policies. Key factors contributing to this trust deficit include the high cost of doing business, political uncertainties, soaring electricity costs, and deteriorating law and order.

“While we struggle with the costs of idle capacity in power generation leading to unemployment and loss of exports and tax revenue, we now have to contend with the threat of idle capacity in the emerging software sector due to poor execution of a firewall,” the PBC said.

The tech industry has already expressed serious concern over the recent internet slowdown, warning that these disruptions could cost Pakistan up to $300 million. The PBC asked the authorities concerned to go back and get the right firewall or learn to apply it without creating an unnecessary impact on employment and exports.

“IT and IT-enabled services, besides agriculture and tourism, offer a valuable opportunity to achieve the PM’s export target over the next three years. High-speed connectivity is also vital for the domestic economy,” the council said.

The Overseas Investors Chamber of Commerce and Industry (OICCI) also warned that frequent internet disruptions in Pakistan could derail the country’s economic progress.

The Pakistan Software Houses Association said in a statement that these disruptions are not mere inconveniences but a direct, tangible and aggressive assault on the industry’s viability, inflicting devastating financial losses estimated to reach $300m, which can increase exponentially.

Published in Dawn, August 17th, 2024