ISLAMABAD: Pakistan’s small manufacturers are being crushed by soaring global compliance costs, with a new World Bank report revealing that meeting European Union (EU) standards alone can drain up to €200,000 in a single year — an amount that surpasses the annual sales of most local firms.
In its latest report, “World Development Report 2025: Standards for Development,” the World Bank stated that one of the challenges that firms in low- and middle-income countries face is the cost of compliance with standards, especially when these firms are trying to access export markets. Compliance costs disproportionately affect small and medium enterprises, because fixed expenses represent a larger share of their total costs.
Small and medium manufacturers of surgical instruments in Pakistan report that compliance costs for the European Union (EU) Medical Device Regulation can reach up to €200,000 in the first year of compliance and €30,000 in subsequent years. These costs can be very high for small firms, which usually have no more than 20 employees and average annual sales ranging between €20,000 and €300,000.
The report noted that firms must often redesign products or repeat costly testing and certification to satisfy buyers in different markets, discouraging small and medium exporters in particular. A textile manufacturer in Pakistan reports spending about US$5,000 per year for each of 15 sustainability standards and labels required by international buyers, many of which cover similar social and environmental criteria but demand separate audits. Over the past two decades, both the number and complexity of standards and technical regulations have grown sharply.
The report also noted that in Punjab, Pakistan, performance pay for tax collectors increased revenue collection by about 40 percent in just two years. A study conducted in the province of Punjab, Pakistan, found that the introduction of performance pay for tax collectors based on revenues generated led toan increase in the collection of tax revenue by around 40 percent after two years.
Pakistan’s exports as share of GDP shrinking: World Bank
A separate study on public procurement in Pakistan found that a policy intervention that increased the autonomy of procurement officers lowered prices of procured goods by 9 percent, reduced procurement delays, and had no observable impact on the quality of purchased goods or likelihood of corruption. The positive effects were particularly great when the senior officers responsible for overseeing procurement were likely to be corrupt.
A proliferating set of international standards—covering everything from food labeling to the specifications of 5G cellular networks—is steadily reshaping the global economic order, delivering hefty benefits to the wealthy nations and large multinational companies that set them while leaving many developing countries on the sidelines, according to the Bank report. Today, standards are foundational economic infrastructure, as vital to prosperity as roads or ports, according to the report, which provides the first comprehensive analysis of the landscape of global standards. By making the transportation of goods seamless, the standardization of the shipping container boosted global trade to a greater extent than all of the trade agreements of the last 60 years, the report notes. Since the turn of the century, however, standards have also become weapons in trade wars: non-tariff measures such as pesticide specifications or labeling requirements, for example, now affect 90 percent of global trade, up from just 15% in the late 1990s.
“Standards are both central and unsung today,” said Indermit Gill, Chief Economist of the World Bank Group and Senior Vice President for Development Economics. “When they’re set right, they go unnoticed: the ship sails through the canal, the building withstands an earthquake, a kilogram weighs the same in Kenya as in Canada, and no one gives the gains that come a second thought. The standardized shipping container might well have catalyzed more trade in manufactured goods than all the trade deals put together. Digital standards could do the same for the services trade. When countries are active in adapting, aligning, and authoring standards, they are a powerful tool for growth and poverty reduction. This report is the first assessment of the role of standards in economic development—and a call to developing nations to make them a core component of their development strategies.”
“The World Bank’s decision to dedicate the 2025 World Development Report to standards sends a powerful signal: international standards are no longer invisible infrastructure - they are critical enablers of sustainable, inclusive development,” said Sergio Mujica, Secretary-General of the International Organization for Standardization (ISO), the world’s largest standard-setting body, which surveyed 173 national standards bodies in support of the data-gathering work for the report. “Unlocking the full development potential of standards means ensuring all countries can participate in their creation and implement them. This report is a timely call to action to strengthen global participation and cooperation in standardization.”
Copyright Business Recorder, 2025
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