akistan’s exports tell a story both of resilience and stagnation. According to the Pakistan Bureau of Statistics, exports in FY2023-24 increased by 7 percent compared to the previous fiscal year. The increase was driven by sectors like rice and IT-enabled services. However, the uptick paled in comparison to the declining trend over the past decade, with export volumes consistently trailing behind regional competitors.

Exporters in Pakistan face a myriad of barriers, each of which chips away at their ability to compete globally. First and foremost, energy costs remain prohibitively high. The electricity and gas tariffs are way above countries like Bangladesh and Vietnam. Frequent price hikes further destabilise businesses.

Second, the tax regime is a labyrinth of complexity, often leaving exporters struggling to claim refunds while grappling with compliance burdens that disproportionately affect SMEs.

Third, financial intermediation is weak, with limited credit products and a lack of innovative financing mechanisms to support exporters, especially those in emerging sectors.

Infrastructure deficiencies further compound the problem. Poorly equipped dry ports, unreliable transport networks and inefficient warehousing options inflate logistics costs and erode competitiveness. Regulatory burdens, including lengthy customs clearance times and convoluted processes for business registration, are equally debilitating. Add to this an overvalued exchange rate that renders Pakistani goods less attractive in the global market and the challenges become even more daunting.

The structural issues don’t end there. Pakistan’s export profile is heavily skewed toward a narrow range of products and markets, with textiles dominating, and limited diversification into other sectors. The absence of skilled labour aligned with industry needs restricts growth, while a lack of market intelligence hampers efforts to penetrate non-traditional markets. High costs associated with international certification further stifle the potential of new exporters. Gender-specific barriers, particularly for women entrepreneurs, exacerbate the problem by limiting their access to finance, networking opportunities and safe trade infrastructure.

These barriers are not insurmountable. Pakistan has the potential to reclaim its position in global markets through a comprehensive strategy targeting these challenges. This strategy requires coordination between government, private sector stakeholders and development organisations. Specific interventions can yield measurable impacts if implemented effectively.

To address energy costs, the government should introduce a targeted energy subsidy programme for exporters, backed by investments in renewable energy. For instance, aligning energy tariffs with regional benchmarks could potentially reduce production costs by 10-15 percent, making Pakistani exports more competitive. Regulatory bodies, such as the NEPRA and the Ministry of Energy can play a pivotal role here, with an immediate focus on short-term relief and a long-term shift towards renewable sources.

Simplifying the tax regime is another pressing priority. Automating refund mechanisms and consolidating taxes across federal and provincial levels can reduce compliance costs for exporters. This could free up working capital and boost SME exports by as much as 20 percent, according to international case studies. The Federal Board of Revenue must lead this initiative, leveraging technology to ensure transparency and efficiency.

The absence of skilled labour aligned with industry needs restricts growth. A lack of market intelligence hampers efforts to penetrate non-traditional markets. High costs of international certification further stifle the potential of new exporters.

Access to finance requires an innovative approach. A trade financing accelerator — designed as a public-private partnership — can pool resources from banks, venture funds and government grants to offer tailored financial products to exporters.

This mechanism could include export credit guarantees and flexible loan repayment options, reducing the financial burden on SMEs and encouraging new market entrants. The State Bank of Pakistan and private financial institutions can pilot such a programme with a medium-term goal of expanding nationwide.

Upgrading trade infrastructure is essential for reducing costs and improving the efficiency of supply chains. The modernisation of dry ports, investment in cold storage facilities and improvement in road and rail connectivity can lower logistics costs by up to 15 percent. Provincial transport departments and the Ministry of Commerce should collaborate to prioritize high-traffic export corridors for these upgrades.

On the regulatory front, digitalisation holds the key to simplifying business processes. Fully operationalising the Pakistan Single Window can drastically reduce customs clearance times, potentially adding $1 billion annually to export revenues. The system must be integrated across provincial and federal trade facilitation bodies to maximise its impact.

Market diversification should be a cornerstone of Pakistan’s export strategy. With opportunities in emerging markets like Africa and Central Asia, targeted trade missions and digital marketing campaigns can introduce Pakistani products to untapped consumers. Leveraging digital platforms for virtual trade expos can also reduce the cost of market entry. The Trade Development Authority of Pakistan and trade missions in embassies must take ownership of this initiative.

The development of a skilled labour force aligned with industry needs is another critical area. Updating curricula in technical and vocational institutes, coupled with industry-academia linkages, can increase productivity in export-oriented sectors by 20-25 percent. Provincial technical boards and private sector stakeholders must drive this initiative, focusing on both immediate and long-term workforce development.

To facilitate market access, the government should subsidise certification costs for exporters, particularly in high-growth sectors like IT and engineering. This can enhance the global credibility of Pakistani products and services, potentially increasing export revenues by $500 million annually. Grants and loans for certifications can be managed through the TDAP in collaboration with industry associations.

Women-led businesses deserve targeted support. Offering subsidised participation in trade expos, providing gender-sensitive trade infrastructure and creating dedicated financing schemes for women entrepreneurs can unlock significant economic potential. A 1-2 percent increase in GDP could be achieved by fully integrating women into the export ecosystem.

Lastly, research and innovation must be prioritised. Allocating funds for export-oriented research and development (R&D) can drive product diversification and innovation, enhancing Pakistan’s competitive edge. Establishing a national innovation fund under the Ministry of Science and Technology can ensure that R&D efforts are aligned with market needs.

Pakistan’s export journey is at a critical juncture. By addressing these barriers with innovative, targeted interventions, the country can unlock its export potential and compete effectively in global markets. This transformation requires not just policy changes but also a collective effort from all stakeholders to build a sustainable and inclusive export ecosystem.

The writer is an associate research fellow at Sustainable Development Policy Institute, currently the heading SDPI Centre for private sector engagement. He can be reached at ahad@sdpi.org. The article doesn’t necessarily represent the views of the organisation.