2 min read
Running a business in Pakistan has become significantly costlier than in neighboring countries, according to recent research, pushing many aspiring entrepreneurs toward salaried jobs instead of launching their own startups. Private sector analysis shows that operating in Pakistan costs roughly 34% more than in other South Asian economies.
Ahmed Jawad, the forum’s chief organizer, said the study drew on industrial and economic data available through December 2025. He pointed to several structural issues driving costs higher. Fuel taxes remain steep, including an 80-rupee ($0.28) per liter petroleum development levy. Meanwhile, interest rates in Pakistan hover around 12.5%, nearly double the 6–7% regional average. Electricity bills add further pressure, averaging 34 rupees per unit, compared with 17 rupees per unit across the region.
The sharp fall of Pakistan’s currency has also hit businesses hard. The rupee slid from 110.7 per dollar in January 2018 to 280 per dollar by December 2025, making imports far more expensive. Corporate tax burdens add to the strain, with effective rates reaching up to 55%, far above regional levels.
Bilal Gilani, executive director at Gallup Pakistan, said policy choices have further increased input costs.
“Trade and industrial policies often protect local producers by limiting cheaper foreign imports, he said. Businesses cannot access globally competitive materials, so they rely on costlier local alternatives.”
High-risk perceptions of Pakistan also affect business costs. Threats like terrorism, money-laundering concerns, and geopolitical tensions mean companies face heavier licensing, certification, and due diligence requirements than their peers in other developing countries. These rules raise fixed costs, particularly for exporters and technology firms.
The expensive business environment appears to have slowed Pakistan’s economic growth. Exports have struggled since 2021, and hundreds of medium-sized textile companies have shut down. Ahmed Jawad noted that upcoming trade agreements favoring India over Pakistan could further challenge local industries.
