Pakistan Business Forum Says Doing Business in Pakistan 34% More Expensive Than Regional Average

The Pakistan Business Forum (PBF) has warned that the cost of doing business in Pakistan is approximately 34 percent higher than in regional economies, creating a severe competitiveness crisis for local industries. According to the forum, elevated operating costs have weakened Pakistan’s ability to compete internationally, even as global trade has recovered in some sectors since 2022.

PBF cited factors such as irrational taxation, high electricity and gas prices, and currency instability as key challenges that have pushed Pakistani exporters out of the market compared to countries like Bangladesh, India, and Vietnam. As a result, Pakistan’s export growth has remained largely stagnant.

PBF Chairman Ahmad Jawad highlighted that businesses in Pakistan struggle to survive, let alone expand exports, due to higher cost structures than regional competitors. He emphasized the need for urgent reforms, including rationalizing the tax system, reducing industrial energy tariffs, and implementing a clear policy to stabilize the rupee. Jawad suggested stabilizing the exchange rate at Rs. 240 per dollar to bring predictability to the economy, control inflation, lower the cost of imported raw materials, and restore confidence in export orders.

He noted that repeated devaluation of the rupee over the past six years, which has amounted to nearly Rs. 160 against the dollar, has not boosted exports. Instead, it has fueled inflation, increased production costs, and damaged business sentiment. While the rupee currently shows some stability, the dollar rate remains high relative to Pakistan’s foreign exchange reserves, benefiting speculative players and harming productive sectors.

In the cotton sector, PBF South and Central Punjab Chairman Malik Talat Suhail expressed concern over the closure of more than 400 cotton ginning factories, which has disrupted the value chain and negatively affected farmers, ginners, and the textile industry. He criticized the imposition of 18 percent GST on cottonseed and oil cake, stating it has raised costs, reduced local demand, and caused financial losses for farmers. Malik Talat Suhail urged the government to withdraw this GST to encourage cotton cultivation in Punjab and Sindh, reduce import dependency, and revive the domestic cotton economy. He called for an SRO by February, ahead of early cotton harvesting, warning that delays could further reduce production, close factories, and pressure foreign exchange reserves.

The PBF warned that without structural reforms, Pakistan risks long-term deindustrialisation, shrinking export markets, rising unemployment, and deeper economic instability. The forum called on the federal government to implement pro-business, pro-export, and pro-farmer policies to restore competitiveness and put the economy on a sustainable growth trajectory.