Pakistan To Continue BIT with Sweden

Newsztodays Report

Pakistan has decided to continue the Bilateral Investment Treaty (BUT) following the intervention of the cabinet. 

Earlier, Pakistan had served a termination notice for BIT with Sweden which had irritated the prime minister Shahbaz Sharif in a recent cabinet meeting. 

Read More: Sweden Keen to Boost Ties with Pakistan in IT Sector

Meanwhile’ Federal Minister for Board of Investment (BOI) Qaiser Ahmed Sheikh held a meeting with H.E. Alexandra Berg von Linde, Ambassador of Sweden to Pakistan, to discuss strengthening bilateral economic relations, enhancing investment cooperation and exploring new opportunities for Swedish companies in Pakistan. Senior BOI officials, including Director General Abdul Samie and Asif Khan, along with other officials, attended the meeting.

Welcoming the Swedish Ambassador, the Federal Minister underscored the longstanding and friendly relations between Pakistan and Sweden and acknowledged Sweden’s strengths in education, governance, technology and innovation. He observed that the two countries had considerable potential to expand their economic partnership, particularly by translating their longstanding ties into greater investment, technology transfer and business-to-business collaboration.

Ambassador Alexandra Berg von Linde thanked the Minister for taking the time to meet and highlighted the longstanding connections between the two countries. She noted the presence of an active Pakistani diaspora in Sweden and the growing interest among Pakistani students in pursuing higher education there, providing further avenues for people-to-people contacts and institutional collaboration.

The meeting noted the presence of more than 40 Swedish companies in Pakistan, reflecting an established commercial footprint and significant potential for further engagement. Swedish companies with a presence in Pakistan include Ericsson, IKEA, H&M and Tetra Pak, representing areas such as information and communication technology, retail, consumer goods and packaging. The Minister emphasised that Pakistan’s large domestic market, young population and strategic location offered considerable opportunities for international investors.

Discussing Pakistan’s economic outlook, the Federal Minister referred to his recent visit to New York, where discussions also centred on the challenge of translating Pakistan’s demographic and economic potential into higher and more sustainable growth. He observed that Pakistan, as the world’s fifth-most populous country, needed to expand productive investment, strengthen industrial capacity and increase value-added exports. Referring to his recent interaction with the Ambassador of Vietnam, he highlighted the importance of export-oriented growth and the lessons Pakistan could draw from successful exporting economies.

The Minister stated that Pakistan was actively working to attract international investors and strengthen its position as an investment destination. He highlighted improvements in key economic indicators, the country’s external-sector position and sovereign credit assessments, including those issued by Moody’s, as positive developments supporting investor confidence. He added that the government was placing greater emphasis on value-added exports, industrial development and the removal of barriers to investment, with interest emerging from international investors, including Chinese and American companies. He expressed Pakistan’s desire to develop similarly strong investment partnerships with Swedish businesses.

The Minister identified agriculture, mining and minerals, information technology, digital services, engineering, manufacturing and other productive sectors as promising areas for Swedish investment. He particularly encouraged Swedish businesses to explore opportunities in sectors where Swedish expertise could support Pakistan’s economic transformation through technology transfer, innovation, modern production methods and sustainable industrial development.

Briefing the Ambassador on Pakistan’s Special Economic Zones (SEZs), the Minister outlined the incentives available to eligible investors under the applicable legal and policy framework, including income-tax exemptions extending up to 2035 and exemptions on import duties and taxes on eligible machinery, subject to the relevant conditions. He explained that these incentives, together with investment facilitation measures, were intended to support industrial development, attract new capital and encourage export-oriented production.

The Federal Minister invited the Ambassador to share Sweden’s perspective on how Pakistan could further improve its investment climate and identify additional facilitation measures that could encourage Swedish companies to invest. He stressed that the government was keen to understand investors’ practical concerns and address the bottlenecks affecting existing and prospective businesses.

The Ambassador informed the Minister that Swedish companies in Pakistan were represented through the Swedish Business Council, where business-related concerns and investment opportunities were discussed regularly. She suggested that direct engagement with Swedish companies could help identify challenges on the ground and provide a clearer understanding of the measures required to improve the business environment. She offered to facilitate meetings with company representatives so they could share their operational experiences, highlight practical difficulties and suggest possible solutions.

Referring to the importance of the energy transition, the Ambassador expressed Sweden’s interest in supporting Pakistan’s efforts towards a more sustainable energy future. She also highlighted the importance of small and medium-sized enterprises (SMEs) in strengthening economic cooperation and creating opportunities for broader commercial engagement. The discussion emphasised that stronger links between businesses, particularly SMEs, could contribute to a more diversified and sustainable bilateral investment relationship.

The Ambassador highlighted the longstanding presence of Swedish companies in Pakistan, particularly Ericsson, which has been operating in the country for more than six decades. She noted that the experience of established Swedish businesses could provide valuable insights into the opportunities and challenges associated with investing in Pakistan. Referring to issues affecting specific industries, she cited the taxation of packaged milk compared with loose milk as an example of the regulatory concerns businesses may face. She emphasised the importance of understanding such practical issues and working towards a predictable and consistent regulatory environment.

A key subject of the meeting was the Pakistan–Sweden Bilateral Investment Treaty (BIT), signed in 1981. The Minister informed the Ambassador that the Government of Pakistan had decided to revoke the notice of termination of the treaty, reaffirming its commitment to maintaining constructive investment relations with Sweden. He explained that the government had constituted a committee to review Pakistan’s overall BIT framework and develop a clear policy approach, including a review of the Model BIT template, to ensure that future investment agreements were modern, balanced and aligned with contemporary international practices.

The Ambassador highlighted that the review and renegotiation of the existing BIT would require engagement with the relevant European Union mandate and institutions, given the implications for other EU member states. She noted that the process could have wider significance for how European partners approach investment treaty negotiations with Pakistan. Both sides recognised the importance of continued consultation and a clear understanding of their respective legal and policy frameworks.

Director General Abdul Samie welcomed Sweden’s interest in engaging on the BIT review and reiterated BOI’s readiness to work closely with Swedish counterparts to move the process forward. He noted that BOI had already sought guidance on the way ahead and looked forward to constructive engagement. He emphasised the need to identify actual regulatory and operational bottlenecks faced by investors, observing that investment trends over the past one to two decades underscored the need for renewed efforts to strengthen bilateral investment flows.

In this regard, a virtual meeting through Zoom is proposed for next week to brief the Swedish side on Pakistan’s approach to bilateral investment treaties, the mandate of the BIT Committee and the ongoing policy review. The meeting will provide an opportunity for both sides to exchange views, discuss the modernisation of the existing Pakistan–Sweden Bilateral Investment Treaty and prepare for the next phase of engagement.

Both sides also discussed the proposed commencement of the first round of BIT negotiations in November 2026, with a Swedish delegation expected to engage with Pakistani counterparts. Director General Abdul Samie reiterated BOI’s readiness to facilitate the process and emphasised the importance of identifying practical regulatory and operational bottlenecks faced by Swedish companies. Ambassador Alexandra Berg von Linde welcomed continued engagement and assured that information regarding Pakistan’s SEZs and investment incentives would be shared with relevant Swedish businesses. She also requested facilitation of engagement with the Swedish side to help advance the proposed discussions.

The Minister further highlighted the role of the Board of Investment in facilitating investors and addressing business-related challenges. He referred to the Business Facilitation Centre (BFC), which provides a coordinated, one-window platform for investor facilitation and helps businesses navigate registrations, licences, approvals and other regulatory requirements. He reiterated that BOI remained committed to working with investors and relevant institutions to resolve bottlenecks and make investment processes more efficient.

Education was also identified as a potential area of cooperation. Sharing his personal interest in the sector, the Minister mentioned the establishment of FAST-NU in his hometown of Chiniot and invited the Ambassador to visit. He noted that Pakistan and Sweden could explore collaboration between universities and educational institutions, including academic exchanges, research partnerships and other initiatives drawing on Sweden’s experience in education, governance and innovation.

The Minister welcomed the Ambassador’s suggestions and reiterated Pakistan’s desire to build a stronger, more diversified and mutually beneficial economic partnership with Sweden. He encouraged Swedish companies to explore Pakistan’s investment opportunities and assured the Ambassador that BOI would continue to facilitate their engagement, address concerns in coordination with relevant authorities and support efforts to translate shared economic potential into tangible investment.

The meeting concluded with a shared understanding of the importance of sustained dialogue, closer engagement with Swedish businesses and continued cooperation on the BIT review, investment facilitation, energy transition, technology and education.

The Board of Investment remains committed to facilitating foreign investment, strengthening Pakistan’s business environment and building lasting partnerships with international investors, including Swedish companies.