ISLAMABAD: The cost of doing business in Pakistan is approximately 34 per cent higher than in comparable regional economies, creating a severe competitiveness crisis for local industry, the Pakistan Business Forum (PBF) warned on Thursday.
In a statement, the PBF said elevated operating costs—driven by irrational taxation, excessive energy prices and currency instability—have significantly undermined the ability of Pakistani industries to compete in international markets. As a result, exports have remained largely stagnant since 2022, despite a recovery in global trade across several sectors.
PBF Chairman Ahmad Jawad said Pakistani businesses are struggling to survive, let alone expand exports, as cost structures remain misaligned with regional competitors such as Bangladesh, India and Vietnam.
To address the crisis, he urged the government to immediately rationalise the tax regime, reduce electricity and gas tariffs for industry, and adopt a clear policy to strengthen and stabilise the rupee.
Mr Jawad proposed stabilising the exchange rate at Rs240 per dollar, arguing that a stronger and more predictable currency would help curb inflation, reduce the cost of imported raw materials and bring stability to export orders. He noted that repeated currency devaluations have failed to boost exports and instead fueled inflation, increased production costs and eroded business confidence.
The PBF pointed out that over the past six years, the rupee has depreciated by nearly Rs160 against the dollar, reflecting weak economic management rather than market fundamentals.
“While the rupee is currently holding its position, the prevailing dollar rate remains excessively high when viewed against the country’s foreign exchange reserves and is not truly market-driven,” Mr Jawad said. He added that artificial devaluation has primarily benefited speculative elements while damaging productive sectors of the economy.
Highlighting the deepening crisis in the cotton sector, Malik Talat Suhail, PBF Chairman for South and Central Punjab, expressed serious concern over the closure of more than 400 cotton ginning factories, disrupting the entire cotton value chain and adversely affecting farmers, ginners and the textile industry.
Mr Suhail said cotton ginners are being denied a level playing field due to the imposition of 18 per cent GST on local cottonseed and oil cake, which has raised costs, reduced demand for local cotton and caused financial losses to farmers.
He stressed that cotton remains a key component of Pakistan’s import bill, and removing the 18 per cent GST would encourage cotton cultivation in Punjab and Sindh, reduce import dependence and help revive the domestic cotton economy.
Urging immediate government intervention, Mr Suhail called for the issuance of an SRO to withdraw GST on cottonseed and oil cake by February, ahead of early cotton harvesting expected to begin by the end of next month.
The PBF warned that failure to implement urgent structural reforms could lead to long-term deindustrialisation, loss of export markets, rising unemployment and deeper economic instability.
It called on the federal government to engage with stakeholders and adopt pro-business, pro-export and pro-farmer policies to restore competitiveness, revive exports and place Pakistan’s economy back on a sustainable growth trajectory.
Story by Khaleeq Kiani
