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The cost of doing business in Pakistan is around 34 percent higher than in regional economies, creating a serious competitiveness challenge for local industries, the Pakistan Business Forum (PBF) said on Thursday. In a statement, the forum said elevated operating costs have weakened Pakistan’s ability to compete with regional peers, even as global trade activity has shown signs of recovery in recent years.
High Costs Behind Export Stagnation
PBF Chief Organizer Ahmad Jawad attributed the widening cost gap to irrational taxation, high electricity and gas tariffs, and persistent currency instability. He said these factors have left Pakistani exporters at a disadvantage compared to competitors in countries such as Bangladesh, India, and Vietnam. As a result, he said, Pakistan’s exports have remained largely stagnant since 2022 despite demand improving in several international markets.
Tax and Energy Reforms
Briefing the media, Jawad said businesses in Pakistan are struggling to survive under rising costs, making export expansion increasingly difficult. He stressed the need for urgent structural reforms, including rationalization of the tax system and a reduction in industrial electricity and gas prices. He also called for a clear and consistent policy to stabilize the national currency.
Rupee Stability
According to Jawad, the rupee should be stabilized at around Rs 240 per US dollar to bring predictability to the economy. He said a stable exchange rate would help control inflation, reduce the cost of imported raw materials, and restore confidence in export and import orders.
He noted that repeated devaluations have failed to boost exports and instead fueled inflation, increased production costs, and weakened business confidence. Over the past six years, the rupee has depreciated by nearly Rs 160 against the dollar, which he described as a result of weak economic management rather than market fundamentals.
While the rupee has recently shown relative stability, Jawad said low foreign exchange reserves suggest the current dollar rate remains excessively high.
Cotton Sector Under Pressure
Highlighting sector-specific challenges, PBF South and Central Punjab Chairman Malik Talat Suhail said more than 400 cotton ginning factories have shut down, disrupting the cotton value chain and adversely affecting farmers, ginners, and the textile industry.
He said the imposition of 18 percent GST on local cottonseed and oil cake has raised production costs, reduced demand for domestic cotton, and caused financial losses for farmers. Cotton, he added, remains a significant component of Pakistan’s import bill.
Warning on Long-Term Impact
The Pakistan Business Forum cautioned that failure to address rising business costs could lead to long-term de-industrialization, job losses, and further economic instability. The forum urged the government to engage with stakeholders and adopt policies aimed at supporting businesses, exporters, and farmers to restore competitiveness and ensure sustainable economic growth.
