Pakistan's business sector faces challenges as production, operating expenses 34% higher than regional economies

Lahore [Pakistan] January 25 (ANI): Pakistan's business sector is confronting a mounting competitiveness challenge, with production and operating expenses now estimated to be 34 per cent higher than those in regional economies, severely weakening the country's position in international trade, according to the Pakistan Business Forum (PBF).
PBF Chief Organiser Ahmad Jawad described the situation as a direct outcome of policy failures and rising input costs, as reported by The Express Tribune.
According to The Express Tribune, in a statement Jawad attributed the widening cost gap to what he termed an irrational tax regime, excessive electricity and gas tariffs, and prolonged instability of the national currency.
He said exporters are increasingly unable to compete with manufacturers in neighbouring countries, a trend reflected in stagnant export performance since 2022. Speaking to the media, Jawad urged the government to take immediate corrective steps, including restructuring the taxation framework, lowering industrial energy prices and implementing a firm strategy to stabilise the rupee.
Reaffirming PBF's recommendation, he said the exchange rate should be kept close to Rs240 per US dollar, arguing that a stable currency would help control inflation, cut the cost of imported raw materials and bring certainty to export and import contracts. Business leaders believe that volatility in exchange rates has discouraged long-term planning and investment.
Jawad further stated that repeated devaluations have intensified inflation, raised manufacturing expenses and undermined business confidence. Over the past six years, the rupee has depreciated by nearly Rs160 against the dollar, a decline he blamed on weak economic management rather than pure market dynamics.
While the currency has recently shown relative steadiness, he said the country's limited foreign exchange reserves indicate that the current rate remains fragile and vulnerable to renewed pressure, as cited by The Express Tribune.
Meanwhile, the crisis has spread to the cotton sector. PBF South and Central Punjab Chairman Malik Talat Suhail revealed that more than 400 cotton ginning factories have closed, disrupting the supply chain and hurting farmers, ginners and the textile industry.
He said the imposition of an 18 per cent general sales tax on locally produced cottonseed and oil cake has increased production costs and reduced demand for domestic cotton, as reported by The Express Tribune. (ANI)