Pakistan's Export Crisis: A Call for Urgent Policy Reforms
The persistent decline in Pakistan's exports has become a critical barrier to economic growth, with the Pakistan Business Forum now urging the government to implement immediate and long-term strategies to reverse this trend. It is widely acknowledged that Pakistani products struggle to compete on the global stage, and this export slump is a primary factor hindering the nation's economic takeoff. The Forum's appeal for action on a war footing underscores the severity of the situation, emphasizing the need for a comprehensive policy prescription to address systemic issues.
High Costs and Competitive Disadvantages
According to the Pakistan Business Forum, the cost of conducting business in Pakistan is alarmingly 34% higher compared to neighboring and regional countries. This disparity places the entire economy on unstable ground, as industries, entrepreneurs, and start-ups face immense challenges in remaining viable. Key factors contributing to this high cost include exorbitant energy prices, which have seen electricity rates soar to Rs56 per unit, and the skyrocketing dollar-rupee parity affecting oil and gas imports. Additionally, illogical and lopsided taxation policies, coupled with an uncertain exchange rate, further exacerbate the difficulties faced by businesses.
Structural Issues and Policy Failures
Pakistan's economic landscape is marred by ad-hocism and a lack of transparency in policy affairs, which are identified as the country's biggest problems. Without a rational taxation mechanism, low interest rates-based borrowing, adequate infrastructure, and proper availability of raw materials—supported by a sound logistical framework—no business can hope to be sustainable domestically or competitive internationally. The stagnation of exports since 2022, despite a global trade recovery in various sectors, highlights the urgency of addressing these structural deficiencies.
Investment Climate and Business Exodus
The situation has reached such an alarming level that the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) recently called for declaring an 'investment emergency.' Foreign Direct Investments (FDIs) are on a downturn, with no promising investors showing interest in Pakistan. Moreover, many established large-scale businesses have ceased operations, citing a lack of conducive environment, harassment by taxation officials, persistent political instability, and poor law and order conditions. This exodus underscores the critical need for a rescue and rehabilitation strategy to prevent the industry from extinction.
Proposed Remedies and Path Forward
To salvage the situation, immediate remedies are essential. The Pakistan Business Forum advocates for an unbiased and business-friendly tax and interest rate policy to stimulate growth. Additionally, strong legislative recourse with rapid justice for litigations is crucial to restore confidence among investors. Scaling down energy prices and transforming the government's role from an active participant to a vigilant watchdog are also vital steps. By addressing these areas, Pakistan can create a more stable and competitive business environment, paving the way for economic recovery and enhanced export performance.
