Boosting exports: 10 policy priorities

Despite recent stabilisation efforts, Pakistan's economic outlook remains constrained by a persistent structural weakness: limited and narrowly based exports. For an economy of over 250 million people, reliance on remittances and episodic capital inflows cannot substitute for a durable export-led growth model. Sustained improvements in productivity, employment, and external balance require a systematic reorientation of policy towards export competitiveness. International experience suggests that successful export growth is rarely the result of isolated incentives. It emerges from consistent policy frameworks that align exchange rate management, energy pricing, taxation, capital allocation, skills development, and public-sector incentives. The following 10 priorities consolidate these elements into an integrated policy approach.

Exchange rate predictability

Export-oriented firms require predictability rather than short-term currency strength. A transparent exchange rate framework that allows for gradual, managed adjustment – for example, low single-digit annual depreciation – enables exporters to price contracts, manage risk, and plan investment. Economies such as Vietnam and Bangladesh have demonstrated that predictability improves export performance more effectively than intermittent stabilisation followed by sharp corrections.

Reliable and competitive energy

Energy availability remains a binding constraint on industrial competitiveness. Export-oriented sectors require contractually guaranteed electricity and gas, delivered through dedicated infrastructure and long-term pricing formulas. International practice shows that even modest energy cost differentials can influence global sourcing decisions. Ensuring reliable energy supply to export industries should be treated as a structural competitiveness measure rather than a discretionary subsidy.

Tax neutrality and labour incentives

Export production operates on narrow margins, making it particularly sensitive to tax complexity and delays. A genuinely neutral export tax regime, with automated and time-bound refunds, is essential. In parallel, employees in designated export-oriented industries could be offered targeted income tax relief or credits, recognising their contribution to foreign exchange earnings. Malaysia's experience in its electronics and knowledge sectors illustrates the effectiveness of such labour-aligned incentives.

Rebalancing investments away from real estate

In Pakistan, capital allocation has increasingly favoured real estate and other speculative activities over productive investment. Aligning real estate returns more closely with underlying financing costs – through taxation of speculative gains and improved enforcement – would help redirect savings towards machinery, technology, and export capacity. South Korea adopted similar measures during its industrialisation phase to support manufacturing-led growth.

Modern Export Processing Zones

Export Processing Zones should evolve into fully serviced industrial platforms, offering predictable regulation, assured utilities, and long-term policy stability. International evidence, particularly from Vietnam, suggests that well-designed industrial zones can attract foreign investment, support technology transfer, and accelerate export diversification. Leveraging surplus power capacity and multilateral financing frameworks can further enhance their competitiveness.

Performance alignment across govt institutions

Export growth requires coordinated action across multiple public institutions. Introducing performance-based incentives linked to export outcomes – including within trade-related ministries, regulators, ports, and overseas missions – can strengthen accountability and execution. Singapore's civil service framework demonstrates how aligning incentives with measurable economic outcomes improves policy delivery.

Integrated digital interface

Administrative fragmentation raises transaction costs and discourages new exporters. A single, legally mandated digital export platform – covering registrations, certifications, customs processes, refunds, and regulatory approvals – would significantly reduce time and compliance costs. Clear service timelines and limited discretionary intervention are essential to its effectiveness.

Industry-university collaboration

Human capital development must be closely linked to industrial demand. Structured partnerships between universities and export-oriented firms – focused on applied research, technical training, and industrial placements – can improve labour productivity and innovation. Germany's dual education system provides a useful reference for aligning academic output with export-sector requirements.

Integration with global value chains

Rather than focusing exclusively on finished goods, Pakistan could expand exports by supplying intermediate goods and components to regional and global manufacturers. Participation in value chains – such as auto parts, electrical components, and processed inputs – has enabled countries like Mexico to scale exports rapidly while upgrading industrial capabilities.

Policy continuity

Export investment is highly sensitive to policy uncertainty. Establishing a medium- to long-term export policy framework, protected from frequent reversals, would enhance credibility and investor confidence. International experience shows that policy stability – particularly in taxation, energy pricing, and regulatory treatment – is a critical determinant of sustained export growth.

Conclusion: Pakistan's export challenge is not rooted in a lack of entrepreneurial capacity or market access, but in fragmented policies and misaligned incentives. Addressing these constraints requires a coherent approach that integrates macroeconomic management, sectoral competitiveness, institutional accountability, and skills development. Implemented consistently, the above priorities can help place exports at the centre of Pakistan's growth strategy and strengthen the foundations for long-term economic resilience.

The writer is an independent economic analyst