The government will soon present a comprehensive auto and tractors policy aimed at strengthening local manufacturing and indigenisation, says Haroon Akhtar Khan, Special Assistant to the Prime Minister (SAPM) on industries and production.

Development economists argue that localisation and indigenisation, where natural advantage exists, is necessary for developing globally competitive commodity-producing sectors aligned with changing international markets. That, they explain, can expand the potential of these sectors to boost exports, cater to domestic demand, reduce external vulnerability, and stimulate foreign direct investment.

“Largely through partnerships with local companies”, to quote the Securities and Exchange Commission of Pakistan, “the country is attracting substantial foreign investment across a wide range of sectors, particularly energy, logistics, information technology and agriculture.” In the past three years, 79 foreign companies have commenced operations in Pakistan, while international companies invested Rs40.7 billion.

Historical records across emerging economies show that foreign investors follow local investors, recalls Shamsul Islam Khan, a commodities and trade expert. “When domestic industry expands capacity, reinvest profits, and express confidence in long-term policy stability, foreign capital views the country as credible,” he writes in an article for The Express Tribune.

With ease in curbs, the State Bank’s latest data shows that profit and dividend outflows on foreign investment during July-January 2026 jumped by 26pc to $1.68bn

Sustainable growth comes from steady capital formation: factories built, machinery imported, skills developed, and exports expanded; a serious economic reset is essential.

Chairing a meeting on Feb 18 with the CEO of Millat Tractors, Sikander Mustafa, Mr Khan said the core objective of the new auto policy is to empower industries, strengthen domestic production and promote domestic-led growth. The government will carry out broad-based consultations with all stakeholders.

During the meeting, Mr Mustafa shared that Millat Tractors had achieved 90 per cent localisation in tractor manufacturing and exporting tractors to the international markets.

The government has also notified a new administration of the Export Development Fund, with an overwhelming majority of 16 private sector members to scrutinise the Fund’s spending proceeds, limiting the role of bureaucracy in managing its affairs. The 22-member administration will be headed by Omer Saeed, CEO of Service Long March Tyres Ltd. He will replace Commerce Minister Jam Kamal Khan as the fund’s chairman, while the position of vice-chairman, held by secretary commerce, has been abolished.

The banking sector has also voluntarily decided to cut the markup on the Export Finance Facility to 4.5pc. Business Recorder analysts say exports grow when policy coherence, cost competitiveness and market access align. Financing plays a role, but it comes late in the chain — at the execution stage — once firms already have orders, inputs and predictable operating conditions.

The International Monetary Fund’s latest acknowledgement that the Fund’s programme has “helped to stabilise the economy and rebuild confidence” should be taken with a pinch of salt, says a Dawn editorial. “However, the gains made over the last couple of years are not trivial.” The data suggests the adjustment burden has fallen disproportionately on lower- and middle-income groups, raising questions about the sustainability of reforms without a parallel strategy for growth, employment and social protection.

With ease in curbs, the State Bank’s latest data shows that profit and dividend outflows on foreign investment during July-January 2026 jumped up by 26pc to $1.677bn compared to $1.328bn in the same period of FY25. In January alone, profit outflows amounted to Rs119m. On the other hand, foreign direct investment inflows dropped sharply to $981 million during July-January compared to $1.66bn in the same period last year, a decline of 41pc.

Pakistan’s food import bill surged to $5.502bn in 7MFY26, a 19.27pc increase from $4.613bn in the same period of last fiscal year. Economist Dr Tasneem Ahmad says Pakistan’s food security requires empowering farmers, which, he stresses, is an economic necessity and strategic imperative. “If Pakistan is serious about food security, rural stability and sustainable growth, protecting farmers from exploitation — whether by markets, mafias or failure — must become a cornerstone of national policy. The time of half measures is long past.”

Simultaneously, trade deficit with nine regional countries jumped by 41.37pc to $9bn in 7MFY26, up from $6.367bn in the corresponding period of last year. The widening gap is attributed to the fall in exports to regional markets, driven largely by reduced shipments to China, followed by Afghanistan and Bangladesh. Exports to Sri Lanka dipped by 28.29pc as well, while Imports from China grew by 24.58pc to over $11bn.

However, the increase in domestic oil and gas production is an encouraging sign. Oil and Gas Development Limited (OGDC) announced on Feb 20 a significant oil and gas discovery at its exploratory well in Kohat district, Khyber Pakhtunkhwa. This is the second consecutive discovery; a day earlier, the OGDC had found gas and condensate at the Dars West-3 well located in the Tando Allahyar district of Sindh.

The government is struggling to step up the implementation of hydropower projects. The National Assembly Standing Committee on Water Resources on Feb 18 recommended 64 water and hydropower projects for FY26 at a cost of Rs976bn amid complaints against the slow release of allocated funds.

Published in Dawn, The Business and Finance Weekly, March 2nd, 2026