Author: Ankit K
Pakistan is facing a serious economic challenge as it moves to repatriate Afghan refugees who have lived in the country for over four decades. The 1.4 million Afghan refugees holding Proof of Registration (PoR) cards, among others, represent far more than just displaced persons seeking shelter. Over generations, they have built extensive business networks, established companies, and invested billions of rupees in Pakistan’s economy. From transportation and construction to import-export trade, Afghan refugees have become an integral part of numerous sectors within Pakistani commerce.
The government’s Illegal Foreigner Repatriation Plan, announced in November 2023 with a deadline of June 2025, has triggered an unintended economic crisis. Afghan refugees are liquidating their assets at below-market prices and transferring capital abroad through informal channels. This mass exodus of funds threatens Pakistan’s already fragile economy, forcing policymakers to scramble for solutions they should have planned before implementing the repatriation policy.
The influx of Afghan refugees started back in 1979 in the wake of the Soviet invasion of Afghanistan. Presently, 1.4 million POR cardholders are residing in Pakistan. In November 2023, under the Illegal Foreigner Repatriation Plan (IFRP), the Government of Pakistan decided to deport all the Afghan nationals illegally residing in Pakistan and accordingly directed all undocumented Afghan nationals to leave the country by 30th June 2025.
Presently, among PoR cardholders, the second and third generation of these Afghan refugees are living in Pakistan, while most of them have never visited Afghanistan. Since they arrived in Pakistan in 1979, Afghan refugees have remained engaged in multiple businesses ranging from transport, construction, eateries, earthmoving machinery, trading of various commodities, and import/export of electronic goods, spare parts, and high-end fabrics, and more. Due to their risk-taking nature, endurance, and business abilities, they have established a huge business conglomerate worth billions of rupees.
The insensitive and forceful expulsion of Afghan refugees by the Pakistan administration is now showing its impact. Afghan nationals, especially PoR cardholders, are selling their properties and businesses at throwaway prices and shifting the capital to Dubai through Hawala/Hundi by converting the proceeds into foreign currency, especially US dollars. Consequently, it is not only impacting the price stability of US dollars in the local market but also resulting in huge capital flight from the country. The impact of such funds transfers through informal channels would be manifold higher if PoR cardholders, who are deeply entrenched in the economic system, start selling their business assets/properties.
Pakistan is already grappling with a dwindling economy. The forceful expulsion of Afghan refugees has added a new dimension to the already poor economic stability. The Pakistan government, in order to stop capital flight from the country, is now considering special provisions available in many countries like the UAE, the USA (Gold Card), or Singapore (Global Investor Programme) etc. (Singapore) for POR Card holders.
Due to uncertainty about their future, POR cardholders have started selling their properties and businesses and shifting their capital to Dubai. However, if any mass exodus is announced regarding POR card holders, it is apprehended that majority of the POR card holders who have established businesses in Pakistan, would sell their properties/businesses and shift their capital to Dubai or any other favorable destination through Hawala/Hundi thus endangering the stability in Pakistan’s forex markets.
Bending backwards, Pakistan may now have to consider providing a special visa scheme. In consideration could come those POR Card holders with total net worth of undivided family is equivalent to Rs.100 million, against an upfront payment of Rs. 0.2 million for a 5–10-year visa for each individual and an additional payment of Rs. 0.1 million for every dependent family member.
Similarly, Pakistan will have to consider POR cardholders, allowing them to register private limited companies with the Securities and Exchange Commission of Pakistan (SECP). For taxation purposes, the same companies are immediately registered with the Federal Board of Revenue (FBR). The companies registered with SECP and FBR are allowed to own properties, assets, bank accounts, and businesses inside Pakistan in their names. All existing benami properties, assets and businesses are transferred in the name of such companies after a one-time payment of 20% straight tax deduction on the fair market value as determined by FBR.
The business income of such companies is subject to taxation being Pakistani Tax resident companies under the provisions of various Tax Statutes as applicable on all resident companies in Pakistan. A centralized database of POR cardholders availing the above scheme may be developed by MOI/SECP/FBR with access to LEAs and IAs besides.
However, Afghans will view these schemes with suspicion as cancellation of the special provision would always hang as a dagger on their head. Further, clearances from the respective police station as well as IAs and NOC from FBR regarding fulfilling all the tax obligations and No Demand Certificate on account of collectable tax arrears, would also be a challenge.
Pakistan’s hasty approach to Afghan refugee repatriation has created a self-inflicted economic wound that could have been avoided with proper planning and consultation. The government’s failure to assess the economic impact of removing 1.4 million people who had built businesses and invested heavily in the country demonstrates poor policy-making. The proposed solutions, special visa schemes, and company registration programs represent desperate attempts to prevent further capital flight. However, these measures may prove insufficient given the climate of uncertainty and mistrust created by the original repatriation announcement. Afghan refugees, having lived under the constant threat of deportation, are unlikely to view these new schemes as reliable long-term solutions.
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Ankit K is an Assistant Professor of International Relations and Security Studies at Rashtriya Raksha University, India. His areas of interest lie at the intersection of war, technology, and strategy.
