France’s TotalEnergies has joined a growing list of Western multinationals slashing their exposure to Pakistan, in the latest blow for the economy in crisis.

At least nine companies, including Norwegian telecom Telenor and Shell Oil, have announced moves to partly or completely exit investments in Pakistan over the past two years due to concerns about over-regulation, a clampdown on repatriating profits and political instability.

“MNCs (multinational corporations) rely on predictability, stability, and consistency to thrive. If these elements are missing, they are more likely to withdraw,” said Shahid Maitla, a political analyst based in Islamabad.

Last week, Total said it sold its 50% stake in Total PARCO Pakistan, a company with a retail network of more than 800 fuel stations, to Switzerland-based commodities trader Gunvor Group. The stake, worth an estimated $26.5 million, was shifted to focus on “core geographies with growth and transitioning opportunities,” Total said.

The announcement came less than a year after Telenor Group in December sold its local unit to Pakistan Telecommunication Company for $388 million. Telenor had been operating in Pakistan for nearly two decades and had some 45 million customers.

Another high-profile case was Shell Oil, which reached an agreement to sell its 77.42% stake in Shell Pakistan to Saudi firm Wafi Energy in a transaction set to be completed by the end of this year.

Other multinationals that have divested fully or partially include pharmaceutical giants Pfizer and France’s Sanofi.

In the midst of an economic crisis that saw foreign exchange reserves plummet, Pakistan sought a multibillion International Monetary Fund bailout last year while officials imposed currency controls that made it tougher for businesses to shift their profits overseas, a key reason for those companies quitting the country.

“If an investor cannot return profits from a country, the investor will probably leave over time,” Telenor CEO Sigve Brekke said in an April media interview.

Between $1 billion and $2 billion in earnings from three MNCs were stuck in Pakistani banks for more than a year, according to earlier reports in local media.

“Why would a company choose to invest if it cannot liquidate its profits?” said Maitla, who is also managing editor of political and economic news portal Bloom Pakistan.

Over-regulation is often cited as another reason for the exodus — and Shell’s departure in particular — while an additional 10% super tax on corporate profits, interest rates as high as 22% and foreign exchange risks have also taken their toll.

Officials, meanwhile, are grappling with smuggling and the underground economy as well as intellectual property infringement.

Pakistan is also in the midst of its worst political crisis in decades after popular Prime Minister Imran Khan was ousted in 2022 and then imprisoned last year on a raft of charges that he said were politically motivated.

Some government officials dispute the drivers for multinationals exiting the country.

“[MNCs] have left Pakistan’s market due to their global restructuring decisions and not due to problems with Pakistan’s economy, which has huge potential to grow,” one official who deals with investments told Nikkei Asia on condition of anonymity since the person is not authorized to talk to media.

But another official working at a multinational in Pakistan blew off that argument: “MNCs do not leave their existing portfolio while doing restructuring.”

Either way, the string of divestments raises serious questions about Pakistan’s investment climate and efforts to beef up weak levels of foreign direct investment (FDI).

“The negative rating of the country and uncertain future is even forcing the local investors to move outside and with the exit of reputed MNCs, there is now little hope for any breakthrough on the FDI front,” Ikram ul Haq, a lawyer with expertise in economics and taxation, told Nikkei.

Islamabad needs to take drastic reform measures to stem the exodus and attract fresh investment, Maitla added.

“Pakistani policymakers need to understand that a rent-seeking approach toward the next wave of potential investors will not be effective,” he said.