Unlocking Opportunity!

Quratul ain Hafeez

The relationship and connection between Pakistan and the United States has long been defined by security and strategic considerations, but economic ties have often lagged behind. Today, as global dynamics move toward geoeconomics, the prospect for U.S. investment in Pakistan sticks out as both an unmapped opportunity and a strategically crucial necessity. Recently, a major trade deal between the United States and Pakistan was announced by President Trump on July 31, 2025.

Pakistani Prime Minister Shehbaz Sharif welcomed this agreement and referred to it as a “landmark deal.” The agreement is centered on expanding Pakistan’s oil reserves, particularly in areas such as Khyber Pakhtunkhwa, Sindh, Punjab, and Balochistan. It also specifies lowering tariffs on important Pakistani exports to the United States, including agricultural items, medical tools, textiles, leather goods, and IT services. In order to make it easier for American digital companies to reach the market, Pakistan also repealed its 5% tax on digital services.

On Pakistan’s national Day, 14^th August, 2015 U.S. Secretary of State Marco Rubio issued a clear message of economic intent: “We look forward to exploring new areas of economic cooperation, including critical minerals and hydrocarbons, and fostering dynamic business partnerships.” With a wide, young, and tech-savvy population, mineral wealth, and refinement to attract foreign investment, Pakistan offers a fertile foundation for American companies.

Despite these prospects, U.S. foreign direct investment (FDI) remains low and tense, signaling the need for revised policies and stronger institutional engagement. The significance of U.S. investment in Pakistan, focusing on major sectors like IT and energy minerals, and agriculture. It also examines the reforms initiated by the Special Investment Facilitation Council (SIFC), which promise commitment to mega projects, and the broader geopolitical context in which investment carries weight far beyond profit.

For the past few years, energy has remained a challenge and an opportunity for Pakistan. Chronic and persistent shortages and dependency on imported fuels have restrained industrial development and growth while creating economic susceptibility. Although Pakistan’s potential in solar, wind, and hydropower remains largely untapped for the U.S., it is positioning itself as a global leader in clean energy.

Pakistan offers a roadway for collaboration in renewable projects, LNG infrastructure, and grid modernization. For instance, a number of solar projects had been initiated as a part of CPEC energy projects covering solar, wind, and hydropower for meeting the demands of power projects, clean energy, and sustainable supply of resources, respectively. Investment in these areas would not only reduce Pakistan’s energy deficits but also align with U.S. commitments to climate diplomacy and sustainable development.

Subsequently, agriculture and agrotech are modernizing the backbone of a country. Agriculture accounts for nearly forty percent of Pakistan’s workforce. However, unfortunately, the fight against water scarcity, outmoded techniques, and no proper training for the farmers about the crop diseases has led to the low productivity. This creates an opening for U.S. investment in agritech solutions such as biotechnology, precision farming, smart irrigation, and food processing.

By advancing and modernizing Pakistan’s agricultural sector, the U.S. firms can contribute to food security for over 240 million people while creating profitable progress, such as improving the low yield, which will bring precision in farming. Availability of proper water reservoirs will create smart irrigation, and proper education for cold storage can save the food. Moreover, partnerships in seed technology, cold-chain logistics, and farm mechanization would not only boost and enhance productivity but also develop the rural economies.

Beyond downright economics, U.S. investment in Pakistan holds significant geopolitical implications. China’s presence through the China-Pakistan Economic Corridor (CPEC) has made Beijing the dominant external player in Pakistan’s economy. While CPEC has provided tangible infrastructure and energy solutions. Increasing its investment and footprinting its tracks, the U.S. can also bring reliable strategic diversification capabilities to Pakistan while reducing its dependence on only China. It will also enhance Islamabad’s negotiating power for economic development and investment openness in the world.

For Washington, deeper engagement would also mean stronger influence in South Asia at a time of intensifying great-power competition. Despite the opportunities, U.S. investment in Pakistan remains modest. Currently, 83 American firms operate in Pakistan, generating over $3 billion annually, yet total FDI from the U.S. remains below $300 million a year. Even though direct U.S. investment rose by over 50% in FY2021–22, it sharply declined to $127 million in 2022, highlighting inconsistency. The graphs below represent Pakistan’s trade with China and the U.S. in 2024 and reflect the contrasting levels of foreign trade with Pakistan.

China, through CPEC and large-scale infrastructure projects, maintains a strong and established presence. On the other hand, the United States, though less dominant, is steadily expanding its role in minerals, IT, and renewable energy. If nurtured, this growing U.S. investment could provide Pakistan with a healthier balance of partnerships and reduce dependency on a single major power.

One of the most promising areas of growth in the near future is Pakistan’s digital sector. With a young population (median age 23) and a promptly expanding internet prevalence. Pakistan is becoming a hub for commerce in health technology, fintech, and logistics. Pakistan already exports IT services worth approximately $2.6 billion per annum, a figure that could grow significantly with greater foreign investment.

This table reflects how Pakistan’s digital economy is gaining momentum, with fintech boosting digital payments, logistics expanding through e-commerce, and health tech rising on the strength of a young, tech-savvy population.

Pakistan’s Digital Economy Momentum

Sector	Key Drivers	Recent Developments	Outlook
Fintech	Mobile penetration; SBP’s Raast	$10B+ digital payments; Easypaisa, JazzCash	Expanding cashless economy, financial inclusion
E-commerce	Young middle class; online retail boom	$7.5B+ market; Daraz, Foodpanda	Growth in logistics, payment gateways
Health Tech	Freelancing & AI tutoring are rising	Platforms: Marham	Telehealth & AI diagnostics expanding
EdTech	Young, tech-savvy population; rural healthcare needs	Platforms: Edkasa, Taleemabad	Freelancing & AI tutoring rising
Overall	130M+ internet users; VC interest	Top 3 in freelancing; $30–40B digital economy by 2030	Integration with CPEC & global outsourcing

Taking into account Pakistan’s digital economy momentum, the USA’s tech firms and venture capitalists could benefit from Pakistan’s skilled yet cost-effective workforce while also supporting innovation in digital payments, cloud services, and e-commerce. Such kinds of investments would also strengthen nation-to-nation connections between the two countries. In addition, to address long-standing challenges, Pakistan established the Special Investment Facilitation Council (SIFC), a civil-military platform designed to fast-track investment processes.

The SIFC aims to remove red tape, streamline approvals, and provide a one-window operation for foreign investors. Key reforms include removing shareholding caps in priority sectors, easing visa restrictions for foreign professionals, simplifying taxation and regulatory processes, and prioritizing IT, agriculture, renewable energy, and mining. For U.S. investors, the SIFC represents a shift in Pakistan’s approach toward facilitating business rather than obstructing it. By providing institutional guarantees and ensuring political backing, the SIFC could transform Pakistan into a more attractive investment destination.

Pakistan faces challenges in maintaining investor confidence due to political instability and bureaucratic hurdles, and overcoming these barriers requires structural reforms and a renewed commitment to economic diplomacy. The untapped potential for U.S. investment in Pakistan is not just an economic opportunity but also a chance to reshape bilateral relations and strengthen regional stability.

Pakistan’s immense mineral wealth, growing digital economy, fertile agricultural base, and renewable energy prospects make it a compelling destination for American investors. Reforms like the Special Investment Facilitation Council (SIFC) signal Pakistan’s commitment to creating a more transparent and investor-friendly environment. For the U.S., deeper economic engagement in Pakistan means diversifying supply chains, securing resources for clean energy and technology, and offering a strategic counterbalance to China’s growing influence in South Asia. For Pakistan, it means jobs, growth, and integration into global value chains.

The author is a Research Scholar at the School of Politics and International Relations, QAU, Islamabad.