Canada is currently Pakistan’s biggest source of foreign direct investment, sending $229.2 million in net FDI during the first quarter of FY27, ahead of China’s $197.5 million, according to State Bank of Pakistan data. With that money already flowing, Islamabad is now hosting the third round of negotiations on a Bilateral Investment Treaty between the two countries, running from October 19 to 21. The treaty would give investors on both sides a predictable, transparent and stable legal framework, with protection, arbitration and dispute resolution: the legal scaffolding for capital that is already moving.
The money is already moving
Canada emerged as the single largest source of FDI into Pakistan in September 2026, with net inflows of $85.3 million and no outflows at all, according to provisional SBP data. That was up 70.6 per cent from $50 million in August and accounted for nearly 39 per cent of the country’s total net FDI for the month.
For the full July to September quarter, Canada’s cumulative net FDI reached $229.2 million, up 1.9 per cent year on year, while China’s stood at $197.5 million, up 62.8 per cent. Total net FDI for the quarter rose 20 per cent year on year to $719.7 million. September alone brought $219.5 million, up 18 per cent on the year but down 32 per cent from August’s $316 million, a reminder that monthly investment figures swing sharply.
These dollar inflows matter because they add to the supply of foreign currency that shapes the USD to PKR exchange rate today and feeds the external buffer reflected in the SBP’s rebuilt $21.5 billion reserves.
What the treaty would change
A bilateral investment treaty, called a Foreign Investment Promotion and Protection Agreement in Canadian terminology, sets binding ground rules: fair treatment of investors, protection against expropriation, and access to arbitration and dispute resolution. That lowers the political risk premium for Canadian companies entering Pakistan and gives Pakistani investors reciprocal protection in Canada.
The third round is being held at the Special Investment Facilitation Council in Islamabad, with the Canadian delegation led by High Commissioner Tarik Ali Khan and the Pakistani side led by SIFC Secretary Jamil Ahmad Qureshi, alongside officials from the relevant ministries of both countries. Both sides are working through follow-up items from the previous rounds and have agreed to use the three days to cover as much ground as possible and move toward finalising the treaty text.
Canadian investors have been asking for exactly this: a predictable and secure investment framework before committing at scale, at a time when Gulf investors have also put $188 million into Pakistan bonds.
What each side wants
The Canadian delegation has flagged four sectors where its investors are interested: renewable energy, mining, agriculture and information technology. A proposed hybrid renewable energy project in Jhimpir has already been reviewed by the two sides, and a Canadian delegation is expected at an upcoming minerals investment forum in Pakistan.
Pakistan, for its part, is eyeing Canadian mining capital. Natural Resources Canada reports that 747 Canadian companies held C$240.6 billion in mining assets abroad in 2024 across 95 countries, a large pool of mobile investment Pakistan wants a share of. There is a clear gap to close: FDI into Pakistan’s own mining and quarrying sector fell 48 per cent year on year to $103 million in the first quarter of FY27, even as Canadian interest in the sector is rising.
Analysts say the treaty’s real test is not the text but its credibility. Regulatory and commercial predictability, stability in taxation and licensing, contract enforcement, foreign exchange availability and profit repatriation are what long-term investors decide on, a point underscored by researchers at Islamabad’s Research and Development Solutions. The agreement would also send a positive signal to the more than 300,000 Canadians of Pakistani origin, who can play a role in investment and business linkages.
What to watch
The round ends on October 21, and no final deal has been announced yet. If the two sides conclude the treaty, officials say it would be a significant milestone in Pakistan-Canada relations, paving the way for more joint ventures and eventually broader trade arrangements.
Watch the language after the round closes: whether both sides report substantive progress on the outstanding issues or simply agree to another round will show how close the text is to final. Either way, the negotiating table is now chasing the money: Canada’s $229.2 million quarter is the figure that gives these talks their weight, and more analysis of Pakistan’s foreign capital story sits in our business and economy coverage.
