Business costs 34% higher than region: PBF

Forum links export stagnation to high energy costs and currency instability

LAHORE:

Pakistan's business community is facing a serious competitiveness crisis as the cost of doing business is 34% higher than in regional economies, severely undermining the ability of local industries to compete in international markets, Pakistan Business Forum (PBF) Chief Organiser Ahmad Jawad said on Thursday.

According to a statement, Jawad attributed the widening cost gap to irrational taxation, high electricity and gas tariffs, and persistent currency instability. He said Pakistani exporters have been unable to match regional competitors, resulting in stagnant exports since 2022.

Briefing the media, Jawad stressed that Pakistan must immediately rationalise its taxation system, reduce industrial electricity and gas prices, and adopt a clear policy to strengthen and stabilise the rupee. He reiterated PBF's position that the rupee should be stabilised at around Rs240 per US dollar, arguing that a stronger and predictable exchange rate would help curb inflation, lower imported raw material costs, and bring certainty to export and import purchase orders.

Jawad said continuous devaluation has fuelled inflation, increased production costs, and eroded business confidence.

He said the rupee has depreciated by nearly Rs160 against the dollar over the past six years, reflecting weak economic management rather than market fundamentals. While the rupee is currently holding its ground, he argued that low foreign exchange reserves suggest the existing exchange rate remains excessively high.

Highlighting the cotton sector, PBF South and Central Punjab Chairman Malik Talat Suhail said over 400 cotton ginning factories have closed, disrupting the cotton value chain and adversely affecting farmers, ginners and the textile industry. He said the imposition of 18% GST on local cotton seed and oil cake has raised costs, reduced demand for domestic cotton, and caused financial losses to farmers.