Pakistan Keeps 1981 Investment Treaty With Sweden, Talks to Rewrite It From November

Pakistan has withdrawn its notice to end the 1981 investment treaty with Sweden, and the two countries plan to start renegotiating it in November 2026. The Board of Investment (BOI) told Sweden's ambassador this in Islamabad on 9 October 2026, according to the government's press release of the same day.

The treaty was about to be cancelled. Now it stays, and the talks will be about rewriting it. For the more than 40 Swedish companies working in Pakistan, that is the difference between legal protection and an uncertain future.

We read the Press Information Department's release No. 107 of 9 October 2026. Below is what was decided, what was only proposed, and what is still open.

Pakistan withdrew its notice to end the 1981 treaty

BOI Minister Qaiser Ahmed Sheikh told Ambassador Alexandra Berg von Linde that the government had decided to revoke its notice of termination of the Pakistan and Sweden Bilateral Investment Treaty, signed in 1981. In plain words, Pakistan had said it would leave the treaty, and it has now taken that back.

A bilateral investment treaty, or BIT, is an agreement between two countries. Each promises to treat investors from the other country fairly and to protect their money from unfair seizure. Most BITs also let a foreign investor take a dispute with the host government to international arbitration, outside the local courts.

The release does not say when Pakistan served the notice of termination. It also does not say when the withdrawal takes legal effect. We did not find either date on an official page.

A committee is rewriting Pakistan's model treaty

The government has set up a committee to review all of Pakistan's investment treaties and to set a clear policy. That committee is also reviewing the Model BIT, the template Pakistan uses as its starting text in any negotiation.

The minister said the aim is for future treaties to be "modern, balanced" and in line with current international practice. The release does not name the committee's members or give it a deadline.

This matters beyond Sweden. Pakistan has investment treaties with many countries. Whatever the committee settles on will shape how each of them is renegotiated.

The first negotiation round is proposed for November 2026

Both sides discussed starting the first round of BIT negotiations in November 2026, with a Swedish delegation expected to meet Pakistani officials. The word in the release is "proposed". No date or venue has been fixed.

Before that, a virtual meeting on Zoom is proposed for the following week. BOI would brief the Swedish side on Pakistan's approach to investment treaties, the committee's mandate and the policy review.

Treat every step after the withdrawal as a plan, not a result. Negotiations of this kind usually take several rounds.

The European Union has to be part of the talks

The ambassador said that reviewing and renegotiating the treaty would need engagement with the European Union's mandate and institutions. Sweden is an EU member, and the EU now has a say over investment agreements its members sign. She said this could affect how other European countries approach investment talks with Pakistan.

That is the slow part. A two-country deal now has a third party in the room. BOI Director General Abdul Samie said BOI had already sought guidance on the way forward.

More than 40 Swedish companies already work in Pakistan

The meeting noted more than 40 Swedish companies in Pakistan. The release names Ericsson, IKEA, H&M and Tetra Pak, covering telecoms, retail, consumer goods and packaging. The ambassador said Ericsson has worked in Pakistan for more than 60 years.

Swedish firms raise their concerns through the Swedish Business Council. The ambassador offered to set up meetings so companies can describe their problems directly to BOI.

She gave one example of the kind of issue they face: packaged milk is taxed differently from loose milk. She asked for a predictable and consistent set of rules. The release does not say whether the government agreed to look at that tax.

What BOI offered Swedish investors

The minister briefed the ambassador on Special Economic Zones (SEZs). These are areas where approved investors get tax breaks. He said the incentives include income tax exemptions running up to 2035 and exemptions on import duties and taxes for eligible machinery, subject to conditions.

He named the sectors Pakistan wants Swedish money in:

1. Agriculture.
2. Mining and minerals.
3. Information technology and digital services.
4. Engineering and manufacturing.
5. Energy transition, which the ambassador raised, along with small and medium businesses.

The minister also pointed to Pakistan's improved credit ratings, naming Moody's. Our explainer on Pakistan's credit rating from Moody's, S&P and Fitch sets out where each agency stands now. Education links came up too. The ambassador noted that more Pakistani students now want to study in Sweden, and both sides spoke about university partnerships.

What this means for businesses and readers

For now, nothing changes on the ground. The 1981 treaty keeps applying, and the withdrawal of the notice removes the risk that it would lapse.

• Swedish companies in Pakistan keep their treaty protection while the new text is negotiated.
• Pakistani exporters and suppliers to those companies gain some certainty, since an investor that feels protected is less likely to leave.
• Students heading to Sweden see no change from this meeting. University links were discussed, but nothing was signed.
• Investors in general get a signal about the new Model BIT. The minister said investors were taking interest as the economy steadies, and the World Bank's growth and inflation forecast for Pakistan gives the outside view of that outlook.

Watch for a date for the November round. That will show whether the EU question has been settled quickly or is holding things up.

Common questions

Has Pakistan cancelled its investment treaty with Sweden?

No. Pakistan had served a notice of termination, but on 9 October 2026 BOI said the government had decided to revoke that notice. The 1981 treaty stays.

When will Pakistan and Sweden start renegotiating the treaty?

The first round is proposed for November 2026. No exact date or venue has been announced.

Why does the European Union need to be involved?

Sweden's ambassador said renegotiation needs engagement with the EU's mandate and institutions, because it affects other EU member states too.

Which Swedish companies work in Pakistan?

The release says more than 40, and names Ericsson, IKEA, H&M and Tetra Pak.

What tax breaks do Special Economic Zones offer?

BOI said income tax exemptions up to 2035 and exemptions on import duties and taxes for eligible machinery, subject to conditions.

How we verified this

What we checked, where we read it, and what we could not confirm.

Last checked on 10 October 2026. Every fact above is from the Press Information Department's press release No. 107, "Pakistan, Sweden explore enhanced investment cooperation; focus on BIT renegotiation, SEZ incentives and emerging sectors", dated 9 October 2026, which we read on pid.gov.pk. The general explanation of what a bilateral investment treaty does is our own. The date of Pakistan's original termination notice is not in the release and we could not confirm it on an official page.