How Do Pakistan’s Military Institutions Control The Economy?

On Tuesday, May 9, 2023, Imran Khan, then Prime Minister of Pakistan, who still commands a broad popular base, entered Islamabad High Court for a trial session connected to corruption and illicit gains in a case known at the time as the Al-Qadir Trust. The session was supposed to be a routine investigation, and Imran Khan went of his own accord; he was not under detention before that.

Suddenly, para-military forces from the Pakistan Rangers intervened, stormed the court, broke the door, and took Imran Khan into custody, placing him in private detention under the National Accountability Bureau (NAB). This began a series of ongoing trials up to the present. A verdict was issued against him and his wife, sentencing them to 17 years in prison in the state gifts case, and there are still other trials ongoing.

The first time I heard about this story was from a Pakistani friend who hates Imran Khan with an irrational intensity. But fairness is precious. Despite his deep hatred of Imran Khan — so much that he can’t even mention his name without an expletive I can’t write here — he told me more than once that he knows and is certain that the matter has nothing to do with corruption charges. Those who prosecute him for corruption have corruption cases far bigger than what they prosecute Imran Khan for.

What happened to Imran Khan opens a door for us to enter a world completely different from our own — a world where the army is not just a security institution but a economic player, with an economy parallel to the state’s own economy. It owns entertainment ventures, construction companies, civilian factories, and lands that were originally owned by the state, but about which the state knows nothing.

What is even more intriguing is the evolution in the mechanisms of this entity — an evolution that brings security and the market so close together that the boundary between them completely dissolves. You can no longer distinguish what is security-related from what is economic.

There is a well-known system in Pakistan called Milbus, a term discussed by the researcher Ayesha Siddiqa, author of Military Inc. The term refers to capital dedicated to the benefit of the military institution, unregistered officially and not part of the defense budget — which means it is far less subject to oversight and accountability.

Interestingly, most of this economic empire we are discussing began as social welfare institutions for retired officers. Over time, they transformed into vast economic empires worth billions, integrated into the civilian market, and no one can hold them accountable for the state resources that have fallen under their control and management.

We will talk about the Fauji Foundation, the Army Welfare Trust, and the SIFC, and we will understand what exactly these institutions do in the Pakistani economy.

The Fauji Foundation is the backbone of this economic empire we are referring to. It was originally established as a charitable welfare fund (and I can barely restrain myself from making a sarcastic remark here). Founded in 1952 with modest capital to support veterans, it has today become the largest business conglomerate in Pakistan, with a net worth of about 5.9 billion USD in 2025. It owns companies across multiple sectors — fertilizers, cement, food, energy generation, and banking — and even owns a bank known as Askari Bank.

This institution is, quite simply, a massive money-making machine for the Pakistani army. Officially, however, it claims that around 80% of its profits go toward charity and social welfare. In other words, all this success supposedly comes from just 20% of its profits — if we take their word for it. But economists and analysts affirm that the real percentage actually allocated to charitable and social activities does not exceed 5%.

This institution benefits from tax exemptions and official government contracts, which means it has a major influence on the private sector and competition within the Pakistani market.

Now, let’s move to the second institution — the Army Welfare Trust (AWT). This fund was established in 1971 and, in short, is a diversified portfolio that includes more than 24 commercial companies operating in aviation, insurance, real estate, banking, and agriculture. It has extensive influence in both the market and the government, whether through institutions or individuals.

There is also another important institution — the Defence Housing Authority (DHA). In short, it is the largest real estate developer in all of Pakistan. It owns vast areas of land across every major city without exception. It profits from acquiring land from the state at very low prices and then reselling it at high prices, generating enormous profits that no analyst or report has been able to quantify accurately to this day.

The name of this institution in Pakistan has been linked to cases of corruption and illicit gains, yet it remains beyond legal accountability.

There are other institutions as well, such as the Bahria Foundation and the Shaheen Foundation — the former affiliated with the Navy and the latter with the Air Force. Each one has its own projects and private companies, following the same logic we discussed earlier.

In other words, the matter has gone beyond the army as a single institution — it has spread to every branch of the armed forces within the military itself.

Now let’s move on to the latest innovation: the Special Investment Facilitation Council (SIFC) — a council established in June 2023. The Chief of the Pakistani Army is the principal member of this council. Its goal is to serve as a single-window platform to attract foreign investments into Pakistan, particularly from Gulf countries, and especially in the sectors of agriculture, mining, energy, and information technology.

This council has the authority to grant exemptions to any investor and enjoys immunity from accountability and legal prosecution.

Take one example from the council’s programs to understand what we’re talking about. They launched an initiative known as the Green Pakistan Initiative, whose aim is to develop commercial agriculture on millions of acres. So what exactly are they doing?

They transfer land ownership from Pakistani farmers to the government. In other words, farmers who have cultivated their land for hundreds of years are now being forced to transfer ownership of their lands to a new military-affiliated company called Green Corporate Initiative Pvt. Ltd. This company then leases those lands to Gulf and local investors through long-term agreements.

This project has been accused of harming land rights, water security, and food security in Pakistan. It is also said to prioritize export-oriented agricultural production without meeting the basic needs of the local Pakistani market.

And if we try to quantify this economic empire in clear numerical terms, we find that the Fauji Foundation alone reached a market value of about 5.9 billion USD in 2025, making it the largest business conglomerate in Pakistan.

In a classic estimate presented by researcher Ayesha Siddiqa in her 2007 book Military Inc., the size of what is known as Milbus was no less than 20 billion USD at that time — and it has since expanded enormously.

As for land ownership, research estimates indicate that about 12% of Pakistan’s land is directly or indirectly under military control.

This empire continues to expand year after year. In the 2024–2025 budget, its value reached 2.13 trillion rupees, and by 2025 it had risen to about 2.55 trillion rupees, an increase of nearly 20%.

To understand the magnitude of this figure, it is enough to know that Pakistan spends only 2% of its GDP on education and just 1.3% on healthcare, while the inflation rate stands at 38%, and more than 100 million citizens live below the poverty line.

The entire system we have been discussing causes one fundamental outcome — profound harm to the economy as a whole, to fair competition, and to the private sector. The numbers speak for themselves, not me. Foreign direct investment (FDI) in Pakistan has declined sharply in recent years, and investors openly state that they avoid entering the Pakistani market because of the lack of transparency and the military establishment’s direct interference in business negotiations.

The situation has gone so far that some foreign investors have filed international complaints against Pakistan, claiming they were directly intimidated and forced to renegotiate contracts inside Pakistani military facilities.

These figures alone reveal a disturbing paradox: vast resources are directed toward the military institution and its commercial arms, while the education and healthcare sectors are literally suffocating from lack of funding. And this bleeding has been ongoing for a long time.

Research estimates suggest that between 1985 and 2005, senior officers acquired more than half a million acres of land, a clear indicator of the immense wealth accumulated by a very small elite within the military establishment — in a country where millions are literally struggling just to survive.

In 2021, a series of leaks known as the Pandora Papers were released, opening a wide window onto the hidden face of Pakistan’s military economy. These leaks revealed the names of several high-ranking figures, including:

• Major General Asim Saleem Bajwa, whose reports exposed multi-million-dollar investments inside the United States.
• Major General Shafaat Ullah Shah, who was shown to own luxurious real estate in London.

The question any reasonable mind would ask is: How can a government officer, whose income comes from a public salary, accumulate such vast wealth?

And as long as there is no transparency or genuine oversight, the answers — as usual — will be that such matters are “classified information” or “issues related to Pakistan’s national security.”

Here emerges the greatest and most alarming paradox of all that has been said: all this wealth and this vast economic empire have not translated into a stronger or more capable military force.

Reports, for example, indicate that the Pakistani Navy operates only two functioning submarines, while facing persistent shortages of spare parts and fuel.

At the same time, when senior officers retire, they don’t truly retire; they simply move into executive positions within military-owned corporations — staying in the same system, only swapping the uniform for a business suit.

Looking domestically, the security forces pay a heavy price every month — between 55 and 60 personnel are killed in clashes with militant groups, nearly half of them from the regular army itself.

In Balochistan, a poor yet resource-rich province, the insurgency continues to grow, because the people there simply see the wealth extracted from their land, yet what returns to them is only poverty.

This issue has now become international. In February 2025, the International Finance Corporation (IFC) — affiliated with the World Bank — along with other development institutions, issued direct criticism of Pakistan over the forced renegotiation of energy contracts under military supervision. Investors reported that these renegotiations took place inside military facilities, accompanied by clear pressure to force them into accepting new terms.

When we talk about Pakistan today, we face a profoundly deep structural imbalance: millions of Pakistanis struggle with inflation and poverty, while beside them grows a military commercial empire worth tens of billions — protected by countless privileges, completely shielded from market and legal oversight.

And the most serious development in this new phase is that the military no longer merely owns a parallel economy — it has now become part of managing the macroeconomy itself, through platforms like the SIFC, and has begun issuing direct threats to foreign investors.