EDITORIAL: That Pakistan’s manufacturing sector stands at a crossroads, grappling with challenges that threaten its competitiveness and sustainability, has been abundantly clear for a while now.
The Pakistan Business Council (PBC) has recently voiced concerns over proposals to hastily reduce customs duties, arguing that such measures, while seemingly beneficial in the short term, could exacerbate the underlying issues plaguing our industrial landscape.
The PBC emphasises that the root causes of our manufacturing sector’s struggles extend beyond tariff structures. High energy costs, limited access to long-term financing, elevated borrowing rates, scarcity of foreign exchange for substantial capital projects, burdensome taxation impeding reinvestment, low productivity, inadequate infrastructure, and security challenges collectively undermine the competitiveness of Pakistani manufacturers.
In light of these multifaceted challenges, the PBC’s call for a collaborative approach among the ministries of commerce, finance, and energy is both timely and imperative. By addressing these systemic issues through coordinated policy-making, the government can create an environment conducive to industrial growth and export enhancement.
The commerce ministry’s Strategic Trade Policy Framework 2020-25 aims to harmonise regulations and support the private sector, reflecting an understanding of the need for cohesive strategies to boost trade and improve the quality of life for Pakistanis.
Furthermore, the PBC advocates for an industrial policy that promotes import substitution with the objective of feeding into exports.
However, it cautions against using import substitution as a pretext for indefinitely shielding domestic industries from global competition, which can hinder both domestic and international competitiveness. Implementing sunset clauses for industries currently protected from global competition is essential to ensuring that protectionism does not become a permanent crutch.
These are very sensitive issues and need to be addressed in the proper local as well as regional/global context. It needs to be factored in, for example, that challenges facing Pakistan’s manufacturing sector are further compounded by the energy crisis.
The country’s reliance on expensive, often imported energy sources has led to soaring electricity prices, rendering manufacturing operations costly and uncompetitive.
Businesses are increasingly turning to alternative solutions, such as installing solar panels, to mitigate these costs. While this shift reflects adaptability, it also underscores the urgent need for comprehensive energy reforms to provide affordable and reliable power to industries.
Additionally, Pakistan’s engagements with international financial institutions, such as the International Monetary Fund (IMF), highlight the critical importance of implementing structural reforms.
Discussions have focused on taxation, energy sector improvements, privatisation of loss-making state-owned enterprises, and public finance management. These reforms are vital not only for securing financial assistance but also for establishing a robust economic foundation that supports industrial competitiveness.
The PBC’s concerns serve as a clarion call for policymakers to adopt a holistic and coordinated approach to revitalising Pakistan’s manufacturing sector.
It is imperative that the ministries of commerce, finance, and energy collaborate effectively to dismantle the barriers hindering industrial competitiveness. By addressing structural inefficiencies, reforming energy policies, and fostering a conducive business environment, Pakistan can pave the way for a resilient and thriving manufacturing industry that contributes significantly to economic growth and development.
Copyright Business Recorder, 2025
Comments