THE recent exit of the American multinational company Procter & Gamble (P&G) from Pakistan has created a stir in the market — unlike the relatively quiet departure of other MNCs over the past three years.

Since 2022, at least 13 companies have exited the country. Among them are four from the pharmaceutical sector, two each from energy and ride-hailing, and one each from technology and telecom. P&G’s departure is particularly significant as it produced a wide range of consumer goods; Gillette was a subsidiary of P&G, and Gul Ahmed Textile had an export garments division associated with it.

People may attribute different reasons to such exits — Pakistan’s challenging economic climate, security concerns, political uncertainty, delays in price approvals, unethical promotional practices by some local pharmaceutical firms, rampant corruption, and inconsistent utilities.

However, analysts cite different causes. In many cases, these exits are less about Pakistan and more about global restructuring. Several MNCs are relocating as part of a strategic shift towards operating from regional hubs rather than maintaining facilities in every country, allowing them to benefit from economies of scale. Shell’s departure, for example, was part of its global reorganisation.

Growing competition from local firms, the dominance of the informal sector, and shrinking profit margins have also eroded group performance. Combined with high taxation and a weakening rupee, these factors have contributed to the exodus.

MNCs strove to comply fully with applicable laws.

That said, an exit does not always mean the withdrawal of products or brands. Many companies retain their presence thr­ough a distributor model and continue relying on third-party market research and adv­ertising agencies to promote their brands.

MNCs have played a significant role in shaping and developing the ‘corporate culture’ in Pakistan, particularly in Karachi. Corporate culture can be defined as “the personality of a company” which entails its “shared values, beliefs, and behaviours that shape how employees interact with each other and the outside world”.

The golden period for MNCs in Pakistan was spread over the mid-1960s to the mid-1990s. Unlike local employers, MNCs placed top priority on maintaining emp­l­o­yee relations. Higher employee satisfaction translated into greater productivity and better business outcomes. Customer care was another area of emphasis: companies ensured that clients anywhere in Pakistan had easy access to their representatives for queries and assistance with transactions.

MNCs introduced professional management systems that were largely absent in local enterprises. These included structured training and development, job des­criptions, performance evaluations, career progression, and policy frameworks for human resources and other departments. Expenditure on employee development was considered an investment — based on the belief that improved knowledge and skills would enhance productivity.

MNCs also strove to comply fully with applicable laws, including labour regulations. They generally supported workers’ right to form and operate trade unions, fostering mutual respect. Because of fair dealings by management, unions would often reciprocate, ensuring a peaceful work environment. Even during the early 1970s — a period of industrial unrest — MNCs largely remained unaffected due to their ethical and transparent practices. The relative stability of the 1960s further encouraged entrepreneurs to invest not only in trade but also in manufacturing.

A notable example is Esso, which established its fertiliser plant in Daharki, Sindh, in 1968. Inc­o­r­porated as Esso Fer­ti­liser Pakistan Ltd in 1965, the plant — then the largest forei­gn in­­vestment in Pakistan — began producing urea in 1968. Later renamed Exxon Che­m­ical Pakistan Ltd (ECPL), it was sold to employees in 1991 through an employee-led buyout. It was regarded as a model company with exemplary management practices and performance.

Another corporate giant, Imperial Chemical Industries, a British firm, had established a soda ash plant in Khewra in 1944, which became Khewra Soda Ash Company Ltd in 1952. The company was renamed ICI Pakistan Ltd in 1966. It maintained a head office and a specialty chemicals unit in Karachi, produced pharmaceuticals and agrochemical products, and operated a paints plant in Lahore and a polyester fibre plant in Sheikhupura. Later, it set up a Pure Terephthalic Acid plant at Port Qasim, Karachi.

As ICI wound up operations globally, its Pakistan operations were sold in July 2012 to an established industrial group through a consortium led by a dominant cement company. It is heartening that the successors of both ECPL and ICI continue to follow the management systems they inherited from these global corporate giants.

The writer is a consultant in human resources at the Aga Khan University Hospital, Karachi.

Published in Dawn, October 18th, 2025