How Elite Capture is Forcing MNCs out of Pakistan

KARACHI/LAHORE: As 2025 ends with yet another wave of multinational exits – P&G shutting down factories in October, Yamaha walking away from assembly lines in September, Lotte Chemical offloading its $1bn Pakistan unit in November amid broader divestments, and Philip Morris slashing operations while delisting from the stock exchange – the official narrative still pins the blame on “tough competition from local brands”. Insiders and company filings tell a different story: consumers have simply run out of money, and what little they have left is being sucked up by politically protected monopolies and cartels that jack up prices at will.

A senior P&G executive, speaking off-record in November 2025, admitted volumes for Ariel and Pampers crashed over 40% in two years not because of cheap knock-offs, but because Pakistani households cut back to bare essentials. Gillette razor sales halved as men switched over to once-a-week shaving, with revenue plummeting from a record 3 billion PKR in 2023 to half that in FY2025. The middle-class wallet, already hammered by electricity tariffs surging nearly 50% from Rs16.77 to Rs24.88 per unit since FY2022 and petrol prices climbing over 100% cumulatively amid global shocks, now faces grocery bills inflated by sugar, cement, fertiliser and poultry cartels that enjoy complete impunity.

These cartels are no secret. The Competition Commission has issued show-cause notices to sugar mills every year since 2010, imposing a record Rs44 billion fine in 2021 for price-fixing that spiked rates before Eid and budgets. Cement makers fix quotas openly – including via WhatsApp groups – as exposed in a 2020 CCP inquiry into cartelisation. Fertiliser companies hoard stocks to force panic buying, leading to a Rs375 million fine on a cartel in June 2025. All of them bankroll major political parties and lobby for tax exemptions, export rebates, and zero regulatory oversight in return. Elite capture ensures that laws remain on paper while profits flow straight into offshore accounts and Dubai properties.

Regressive taxation and cartel inflation wipe out real incomes faster than any salary increase. World Bank data for 2025 shows multidimensional poverty heading toward 45%, with the lower-middle income rate at 42.3% in FY24 and an additional 2.6 million pushed into hardship, as the “new poor” – once comfortable urban families – now skip branded shampoo, diapers, chocolates, and motorcycles altogether. Volume-driven MNCs, built on selling small packs to hundreds of millions, suddenly face a market that has shrunk by a third in real terms, with FMCG sales stagnant amid 0.5% economic contraction in 2023 and ongoing retail woes.

Consumers are truly at the mercy of this nexus. They pay monopoly prices for wheat, sugar, cement, and electricity generated by IPPs owned by the same business-political families, leaving almost nothing for the very branded goods that create jobs and tax revenue.

Until Pakistan breaks up these cartels, plugs the legal loopholes bought with political funding, and shifts from elite capture to broad-based growth, more factory gates will swing shut. The multinational exodus is not dying because local brands got better – it is dying because ordinary Pakistanis can no longer afford to buy anything beyond survival. And the people who made that happen are the same ones now lecturing about overpopulation.