Pakistan is developing a proposed National Compliance Entity (NCE) to help exporters meet increasingly demanding international standards, regulate export-related compliance auditors and provide a mechanism for businesses to challenge audit findings. The proposed body is part of efforts to address compliance gaps that officials say are limiting Pakistan’s access to higher-value international markets and preventing exporters from fully benefiting from opportunities in developed economies. The entity has not yet received formal approval, with consultations already held with around 55 stakeholders before the proposal is submitted for consideration by the government.
According to Shahzad Ejaz, a spokesperson for Pakistan’s Ministry of Industries and Production, the proposed National Compliance Entity would provide exporters with guidance, training, practice audits and information on applicable international standards. It would also license or accredit auditors involved in export-related compliance assessments and establish standards for their work. The proposed framework would give exporters a channel to challenge audit findings, procedures, methods or the conduct of auditors, while its regulatory jurisdiction would remain focused on export-related compliance auditors and audit activities rather than directly regulating exporters or industries.
The proposal comes as Pakistan faces challenges in expanding and diversifying its exports. Merchandise exports declined by 5.93% to $30.14 billion during fiscal year 2025-26, which ended in June, compared with $32.04 billion in the previous fiscal year, according to provisional data from the Pakistan Bureau of Statistics. Officials and international institutions have pointed to a significant gap between Pakistan’s existing exports and the country’s potential. Structural issues including limited product diversification, low productivity and difficulties in meeting requirements for international markets continue to affect the ability of businesses to move into higher-value export segments.
Pakistan’s export basket remains heavily concentrated in textiles and apparel, which recorded exports of approximately $17.93 billion and accounted for almost 60% of total merchandise exports. Other major export categories include leather, sports goods, rice and other agricultural products, surgical instruments and carpets. The government has sought to expand exports of pharmaceuticals, processed food, chemicals, engineering products and other value-added goods, but businesses operating in these sectors often face more extensive requirements involving certification, testing, traceability, product quality and compliance with individual buyer standards.
Officials involved in discussions over the proposed entity said Pakistan has previously experienced significant commercial consequences when exporters or suppliers failed to meet international standards. A senior commerce ministry official cited Disney’s decision in 2013 to withdraw its sourcing from Pakistan over labour standards as an example of the potential impact of compliance failures. The official said the loss of major sourcing arrangements can create significant uncertainty for exporters and workers when international companies decide to shift procurement because required standards are not being met.
Compliance challenges also affect the markets where Pakistani exporters can sell their products and the prices they are able to obtain. Officials said exporters supplying less demanding markets may face fewer certification and standards-related requirements, but products sold into these markets can generate lower returns compared with sales in markets where buyers require higher levels of quality assurance and compliance. The proposed NCE is therefore intended to help Pakistani businesses understand and meet the requirements necessary to compete for buyers in more demanding international markets.
Pakistan already has preferential access to European markets through the GSP+ scheme, but officials said exporters are not fully taking advantage of this opportunity because of weaknesses in areas such as traceability, certification and government monitoring. According to the commerce ministry official, Pakistan has zero-duty access on 91% of tariff lines under the arrangement, yet some products with potential for European markets have struggled to gain access. Honey was cited as an example of a product for which Pakistan has access but has not developed significant exports to the European Union.
International compliance requirements have also expanded beyond traditional product quality and safety standards. Exporters increasingly face environmental, social and governance requirements as well as additional standards established directly by international brands and buyers. Meeting these requirements can be particularly challenging for smaller businesses that may lack the technical expertise, documentation systems and financial resources needed to prepare for external audits and certification processes.
Under the proposed framework, the National Compliance Entity would maintain a repository of applicable standards and provide exporters with workshops, capacity-building programmes, documentation and technical guidance. It would also offer demonstration audits, where requested, to allow businesses to prepare for audits conducted by international brands and buyers. The body would regulate organisations conducting export-related compliance audits through licensing or accreditation, establish standards for auditors and monitor their performance, while also providing exporters with a formal mechanism for raising concerns about audit decisions or practices.
The consultations for the proposed entity have involved export associations, 10 leading chambers of commerce, provincial industry departments, the Small and Medium Enterprises Development Authority (SMEDA), testing laboratories and the safety auditing agency ACCORD. Shahzad Ejaz said the proposal would be presented to Prime Minister Shehbaz Sharif before being forwarded to the cabinet for formal approval. If approved, the entity would provide a central framework for improving export compliance and supporting businesses as they seek access to international markets.
Small and medium-sized enterprises are expected to be a key focus of the initiative as Pakistan seeks to broaden its export base beyond established sectors and large exporters. Officials noted that many SMEs continue to view compliance, marketing and branding expenses as costs rather than investments in future market access. The proposed NCE is intended to help change that approach by providing businesses with information, training and preparation that can improve their ability to meet international requirements, enter higher-value markets and potentially increase returns from exported products.
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