Pakistan’s cost of doing business is estimated to be roughly 34% higher than comparable economies in the region, placing exporters at a significant disadvantage and limiting their ability to compete in global markets, the Pakistan Business Forum (PBF) has highlighted. The forum’s latest assessment underscores the combined impact of high energy prices, inconsistent taxation policies, and currency volatility on the country’s industrial sector.
Ahmad Jawad, Chief Organiser of the PBF, stated that rising operational costs have forced businesses to prioritise survival over growth and expansion, further eroding competitiveness. While global trade has recovered across multiple sectors since 2022, Pakistan’s export performance has largely remained stagnant, reflecting structural pressures rather than external market conditions. Jawad emphasised that without immediate interventions, local industries risk losing ground to regional peers such as Bangladesh, India, and Vietnam, where costs are significantly lower.
A central concern highlighted by the forum is the volatility of the Pakistani rupee. Jawad stressed the need for a stable exchange rate around 240 per dollar, arguing that predictability in the currency could help control inflation, lower the cost of imported raw materials, and provide businesses with certainty in planning and contracts. According to the PBF, repeated devaluations over the past six years—amounting to nearly Rs160 against the dollar—have failed to boost exports and instead increased production costs, weakened business confidence, and amplified inflationary pressures.
Energy costs remain another critical challenge for the industrial sector. High electricity and gas tariffs continue to burden manufacturers, limiting their ability to compete on price in international markets. The PBF urged the government to reduce energy costs for industry and implement a clear and predictable policy framework to support sustained growth.
The forum also drew attention to sector-specific pressures, particularly in cotton and textiles. Malik Talat Suhail, PBF Chairman for South and Central Punjab, noted that over 400 ginning factories have closed, in part due to an 18 percent general sales tax on locally produced cotton seed and oil cake. Suhail urged the government to remove this tax through a statutory regulatory order ahead of the early cotton harvest to encourage domestic cultivation, reduce import dependency, and support farmers, ginners, and the wider textile value chain.
Overall, the PBF warned that delays in implementing structural reforms could accelerate deindustrialisation, result in the loss of export markets, and increase unemployment. The forum called on policymakers to engage closely with industry stakeholders and adopt reforms that prioritise cost rationalisation, stable exchange rates, and enhanced export competitiveness. The message is clear: without decisive action, Pakistan risks falling further behind its regional peers despite having a strong industrial base and export potential.
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