Rethink, innovate, export

Pakistan’s economic trajectory remains stifled by structural inefficiencies, short-termism and a domestic market that simply cannot sustain long-term growth. Inflation may have cooled, but only because demand has collapsed. Businesses have gone into survival mode, while government policy continues to chase revenue instead of reform. But both must recognise: survival is not strategy.

If Pakistan is to build a resilient, forward-looking economy, it must rethink its economic priorities, institutional architecture, and competitiveness model – centred firmly on innovation and exports.

With a population of nearly 250 million, Pakistan’s goods and services exports is around $ 40 billion. This is not a trade gap but a strategic failure. Countries with half our population are exporting five to ten times more. Bangladesh, for instance, grew its exports from $1.5 billion in 1990 to over $50 billion today. Such success stories offer valuable lessons. A comparative study of production costs, trade facilitation frameworks, export incentives and market access policies between Pakistan and its regional peers is urgently needed to inform reforms at home.

The export sector, instead of being incentivised, has long been penalised. Excessive taxation, delayed refunds and unpredictable energy pricing have made Pakistani exports increasingly uncompetitive. The reduced tax rate for exporters – available until FY2024 – must be urgently reinstated, if not across the board, then at least for value-added manufacturing and other high-potential sectors that invest in product development, branding, and technology.

The same applies to services exports, particularly IT and freelancing. These sectors require a stable, long-term tax framework (ideally zero-rated), simplified documentation and access to global payment platforms. With Pakistan’s vast pool of digitally skilled youth, services could become the country’s fastest-growing export engine if supported by the right policy and digital infrastructure.

The state of innovation within Pakistan’s industrial and corporate landscape remains poor. Most firms operate without structured R&D, product development units or export-oriented design strategies. While leading global companies project over 25 per cent of future revenues from products not yet in existence, Pakistani businesses remain locked into basic, low-margin offerings. This must change. Firms should commit at least 2–3 per cent of their revenue toward innovation, while the government co-finances export-readiness programs, sectoral innovation hubs and international certification support to help meet global standards.

Agriculture, an overlooked export segment, also holds immense potential. Relevant stakeholder of Pakistan have demonstrated in specific cases, such as sesame seed exports, how market access through targeted FTAs can lead to exponential growth. Our agricultural produce can find higher-value markets if matched with the right packaging, compliance standards, and global marketing. Institutional support for agri-exporters, participation in relevant global food exhibitions and aggressive negotiation of preferential trade agreements for agricultural goods should be core components of export diversification strategy.

One of the most glaring institutional failures lies in the Trade Development Authority of Pakistan (TDAP) and its management of the Export Development Fund (EDF). The Export Development Surcharge – levied since the early 1990s at 0.25 per cent of export value – has likely generated over Rs100 billion to date. This was meant to fund infrastructure, innovation and capacity building for exporters. Yet much of the fund has remained unused, diverted to unrelated government expenses or spent on non-strategic activities such as loosely planned trade exhibitions, foreign junkets and bureaucratic overheads.

Worse still, there is no transparency regarding how much has been collected, how much has been spent or what outcomes were achieved. The EDF was intended to serve as the backbone of export competitiveness. Instead, it has become a slush fund – misaligned with its original purpose and largely detached from the exporters who finance it.

Reforming this system requires bold structural changes. TDAP must be fully depoliticised and de-bureaucratised. While the chairman has occasionally been appointed from the private sector, the organisation remains staffed primarily with bureaucrats and operates in the style of a typical government department – choked by non-performance, procedural rigidity and a lack of accountability for results.

TDAP should now be restructured as an autonomous, corporate-style entity governed by a high-powered board chaired by the Prime Minister, with a majority drawn from the private sector and composed of individuals with distinguished records in trade, industry, and innovation. Its CEO must be appointed through an international search and possess deep expertise in global trade, market access and export strategy. The revamped body must be held accountable for impact, not activity, with annual evaluations tied to measurable export outcomes. It should be renamed the Trade and Export Facilitation Organization and operate under its own independent governance framework, exempt from PPRA and other procedural rules that stifle private-sector dynamism.

Simultaneously, the EDF must be ring-fenced and converted into a true National Innovation and Export Competitiveness Fund. Its use must be strictly limited to high-impact initiatives such as research, skills development, export-oriented innovation, product design, certification, branding and digital enablement. It must be governed by a professionally managed secretariat, subjected to independent audits, and required to publish regular performance reports to ensure use of such funds to enhance Pakistan’s export readiness – no more junkets, no more ceremonial trade shows.

To craft and implement a credible national export strategy, Pakistan must also bring in global expertise. A world-class strategy consulting firm – such as McKinsey, BCG or a leading Big Four firm with a global trade track record – should be engaged to design a comprehensive, data-driven export strategy considering Pakistan’s unique characteristics. This would include sector prioritisation, benchmarking against global peers and developing a roadmap to scale, diversify and sustain export growth.

But strategy is only half the solution. A separate implementation partner – such as GIZ, or another firm with tested delivery experience – should be engaged to operationalize the reforms, digitise trade facilitation, restructure TDAP and deliver targeted industry programmes. A two-tiered model, separating strategic design from delivery oversight, will ensure clarity of responsibility, performance monitoring and continuous course correction.

To trigger a meaningful breakthrough in exports, Pakistan should also launch a bold, flagship initiative: the ‘Pakistan Export 100’ programme. This initiative would identify and support 100 mid-sized companies with the potential to become $100 million exporters within five years. Selected through a transparent, merit-based process, these companies would receive tailored support including export audits, financing facilitation, branding and market access support and regulatory fast-tracking. Similar programmes in Malaysia, Vietnam and Turkey have created national champions that transformed their export profiles. Pakistan must now do the same.

At the same time, Pakistan must unlock its entrepreneurial potential. A thriving startup ecosystem, aligned with export goals, could help redefine Pakistan’s services trade, especially in digital goods, agri-tech, logistics and fintech. This will require reduced tax rates for early-stage ventures, simplified IP registration, unrestricted cross-border digital payments and government procurement policies that prioritise scalable export-linked innovation. Export-linked incubators should be established in major cities, closely tied to global market demand and trade platforms.

None of these reforms can be designed or executed in isolation. A national export strategy must be anchored in open, structured engagement with the business community, civil society, academia and regional stakeholders. Sectoral roundtables, chambers of commerce dialogues and innovation policy forums should be institutionalised to shape a shared national export vision. Without continuous feedback and collaboration, policy will remain detached from market realities and implementation will falter.

Pakistan can no longer rely on remittances, external inflows, and repeated IMF programmes as its economic lifeline. Real growth, long-term prosperity and sustainable job creation will come only when we shift from taxing survival to rewarding productivity, from selling at home to scaling globally, and from managing decline to investing in the future.

The path forward is clear. The time to act is now.

Rethink. Innovate. Export.

The writer is a former managing partner of a leading professional services firm and has done extensive work on governance in the public and private sectors.

He tweets/posts @Asad_Ashah