U4 Anti-Corruption Resource Centre

This Anti-Corruption Helpdesk brief was produced in response to a query from a U4 Partner Agency. The U4 Helpdesk is operated by Transparency International in collaboration with the U4 Anti-Corruption Resource Centre based at the Chr. Michelsen Institute.

Query

Please provide an overview of the most pressing integrity risks affecting international businesses operating in Pakistan. 

Summary

Infrastructure, telecommunications, energy and textiles are all potential sectors of interest for foreign firms and investors looking to do business in Pakistan. However, corruption remains a major obstacle to companies operating in the country, along with macro-economic uncertainty and lingering security risks.  

While companies are likely to encounter corruption across all sectors, certain industries and firm profiles are more at risk than others. Collusive contracting and kickbacks remain widespread in the energy and infrastructure sectors, while industries driven by fast-moving consumer durables, such as telecommunications, seem to be becoming more resistant to such practices.  

Larger firms are generally less vulnerable to coercive corruption, and the positive effects of foreign bribery laws, such as the UK Bribery Act, can be gradually felt percolating through multinationals’ value chains as local firms become increasingly sensitive to the compliance requirements of foreign companies.  

Contents

  1. Global evidence of the impact of corruption on business and investment
  2. The Pakistani economy and international investment
  3. Business environment and corruption in Pakistan
  4. Cross-sectoral integrity risks
  5. Additional commentary by key sectors
  6. Business anti-corruption initiatives in Pakistan
  7. Anti-corruption guidance for businesses
  8. References

Main points

  • Pakistan is a sizeable trading partner for the United Kingdom, and offers opportunities for investment in infrastructure, telecommunications, natural resources and textiles.
  • Firms view corruption as the most significant obstacle to business in the country, ahead of macro-economic uncertainty and lingering security concerns. 
  • Key areas of integrity risks include public procurement, political exposure, bureaucratic corruption and fraud.
  • The forms of integrity risks vary significantly by firm profile, sector and the extent of interaction with government. Larger firms are generally less vulnerable to coercive corruption.

Authors

Matthew Jenkins, tihelpdesk@transparency.org

Reviewer:

Roberto Kukutschka, Transparency International

Date

28/02/2019

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