The cost of doing business in Pakistan right now isn’t just a “statistic”—it’s an outright crisis that is being felt in every factory, field, and household across the country. When you hear that it’s nearly 34% more expensive to run a shop here than in neighboring countries like India or Vietnam, it explains exactly why our exporters are barely keeping their heads above water.
According to the Pakistan Business Forum, this gap has essentially nuked our competitive edge. Margins are evaporating, and for a country that desperately needs exports to keep the rupee stable and put people to work, this setup isn’t just “problematic”—it’s a slow-motion disaster that we’re watching play out in real-time.
Looking at our export numbers since 2022, the reality is pretty bleak. While global trade has mostly bounced back from the pandemic-era chaos, Pakistan’s exports have just… stalled. It’s not that people don’t want what we’re making; our quality is still world-class. It’s that we literally can’t compete on price or reliability anymore. Meanwhile, countries like Vietnam and Bangladesh are racing past us. They’ve managed to keep their costs in check and their policies predictable. They offer their exporters clarity, while in Pakistan, we’ve done the opposite. We’ve let costs spiral through policy choices that honestly feel like we’re sabotaging our own team.
Energy is the biggest culprit by far, and it’s the one thing every business owner brings up first. Industrial gas and electricity rates are miles above regional benchmarks. These high prices aren’t some act of God or a natural disaster; they’re the result of a broken system riddled with leaks, massive transmission losses, and terrible governance. Instead of treating our factories as the engine of our growth, the government seems to view them as a “cash cow” to be milked for taxes to cover up for state-owned enterprise failures. But international buyers don’t have time for our excuses. They are operating in a price-sensitive world. If we can’t match the price of a supplier in Dhaka or Hanoi, those orders vanish in a heartbeat. Once that buyer leaves, they don’t just come back next season; they build a long-term relationship with our competitors, and we lose that market share for a generation.
Then there’s the tax system. It feels like we’re punishing the very people who actually play by the rules. Rather than broadening the tax base and going after the massive informal sector that pays almost nothing, the government just keeps squeezing the same documented, tax-paying businesses with new levies, advance taxes, and withholding mechanisms. It’s a classic “vicious cycle.” The more you tax the honest businesses, the less they invest in new machinery or more staff, and the more the “underground” economy grows because formalizing is just too expensive. It’s a race to the bottom that we’re currently winning.
We’re seeing the worst of this in the cotton sector, which is the heart and soul of our textile industry. Textiles are our biggest export earner and a massive source of rural jobs, yet we are watching this sector crumble. Over 400 cotton ginning factories have already shut down. Think about that for a second—400 businesses gone, and with them, thousands of livelihoods. It’s a total breakdown of the entire value chain. Farmers are getting less for their crops because the local buyers are gone, and manufacturers are now forced to spend precious foreign currency importing cotton from abroad just to keep their mills running.
This isn’t just “bad luck” or a global trend—it’s about the choices made right here at home. Take the 18% GST on cottonseed and oil cake, for example. It’s effectively a tax on local farming. It has pushed domestic costs so high that it’s actually cheaper for a textile mill to import cotton from the US or Brazil than to buy it from a farmer down the road. It’s a massive policy failure that hurts everyone from the field to the factory floor. It undermines the very reason we have an export sector in the first place: to save foreign exchange, not spend it on things we can grow ourselves.
If we don’t fix this, the threat of “de-industrialization” becomes very real. We are seeing factories move their operations to Dubai or Egypt because they can’t justify the costs here anymore. For a country with a massive, young population, losing our industrial base is a nightmare scenario. We need more factories, not fewer. We’re also scaring off new investors who look at our energy prices, our tax chaos, and our lack of regulatory consistency and decide to put their money literally anywhere else. Capital is a coward; it flows where it feels safe and where the math makes sense. Right now, in Pakistan, the math just doesn’t add up.
The most frustrating part of all this? Everyone knows exactly what the problems are. We’ve had the task forces, the high-level meetings, and the glossy presentations. But the “relief” on the ground is nowhere to be found. There’s a massive gap between the rhetoric in the halls of power in Islamabad and the actual struggle on a factory floor in Faisalabad or a cotton field in Multan. Trust is eroding between the business community and the state because promises are made but rarely kept.
Pakistan simply cannot afford to keep pricing itself out of the market. Competitiveness isn’t some “extra” or a luxury we can worry about later when the economy is better; it’s the only way we’re going to survive. We need to fix energy costs, rethink the tax burden on the documented sector, and start treating our exporters like the partners they are. Every day we delay, the path back to a healthy economy gets a little bit narrower.
We are at a crossroads. One path leads to sustained growth where we finally compete on the global stage, using our young labor force and our massive agricultural potential to build a modern economy. The other path leads to deeper stagnation, where we stay trapped in a cycle of high costs, low investment, and constant debt. The choice is clear: we either fix the system now, or we watch the door to recovery slowly close for good.