Defence export fuels policy rethink

Business leaders urge shift from aid-driven policies to investment, innovation

LAHORE:

As Pakistan enters a phase marked by unprecedented defence export opportunities and an equal chance to reposition itself within evolving global economic dynamics, business leaders are calling for a fundamental restructuring of the country's external economic relationships to achieve sustainable, self-driven growth.

Former president of the South Asian Association for Regional Cooperation (SAARC) Chamber of Commerce and Industry Iftikhar Ali Malik has urged the government and the private sector to prioritise competitiveness, investment and innovation as the cornerstones of Pakistan's economic revival. He said the country stands at a critical juncture where it can either continue a cycle of crisis management or break free towards genuine economic sovereignty. "For too long, we have been caught in a trap of external assistance that has weakened our structural foundations and discouraged strategic planning," said Malik. He added that the current global realignment, combined with growing interest in emerging markets and regional connectivity initiatives, presents Pakistan with a rare opportunity to recalibrate its economic priorities and pursue growth on its own terms.

The trade veteran stressed that attracting long-term foreign direct investment should take precedence over short-term capital inflows linked to balance of payments pressures. Such investments, he said, would bring not only capital but also technology transfer, managerial expertise and crucial access to global markets. Equally important is rebuilding confidence among domestic entrepreneurs and diaspora investors, who can provide the foundation for sustained economic expansion, he added.

Another prominent businessman, who requested anonymity, pointed to Pakistan's growing defence sector as a potential game-changer for the broader economy. Following the Pakistan-India conflict in May 2025, Pakistan's defence exports have surged to approximately $13 billion, though a majority of this volume remains in the pipeline, opening new avenues for economic diversification.

"The defence export boom is not just about military hardware; it represents a validation of Pakistani manufacturing capabilities and technical expertise," the businessman said. "These export orders are creating, and will continue to create, ripple effects across the private sector, helping manufacturers identify new international markets and establishing Pakistan as a reliable supplier. Beyond the immediate foreign exchange benefits, which are substantial, this is building institutional capacity and global credibility that can be leveraged across multiple industries."

He added that the defence sector's success demonstrates what Pakistani industry can achieve when it focuses on quality, innovation and compliance with international standards, lessons that should be applied across other sectors of the economy.

Malik, however, emphasised that redefining Pakistan's external economic relations requires a more balanced diplomatic approach, where trade agreements and regional connectivity projects are driven by national competitiveness rather than urgent financing needs. Diversifying export markets and reducing overreliance on traditional partners would strengthen Pakistan's negotiating position globally, he said. Both business leaders said the future lies in leveraging innovation across sectors, including digitalisation, fintech, agritech and renewable energy. These areas, they noted, offer opportunities to bypass traditional development constraints and integrate directly into global value chains while creating quality employment for Pakistan's young population.

This transformation, they argued, demands sustained commitment, transparent governance and accountability. "This is not about quick fixes or cosmetic reforms; it requires genuine ownership of the reform process and a long-term vision that prioritises resilience and sustainability over short-term expediency. If we can maintain this focus, Pakistan can emerge as a self-confident and productive economy, integrated into the global system on an equal footing," Malik added.