EDITORIAL: While plenty of column reams continue to underscore how government missteps — from complicated and ever-changing tariff and regulatory regimes to the mishandling of the power sector that has pushed business costs to unsustainable levels — have dragged down our export performance, there is an equally pressing need to scrutinise where businesses themselves have fallen short, and how their inability to adapt, innovate and compete internationally has accelerated the downward trajectory of their global footprint. Such questions shaped much of the debate at the recent “Trade, Tariffs and Beyond — Building Pakistan’s Export Economy” seminar in Islamabad.
The most alarming warning came from World Bank economist Anna Twum, who stressed that over 70 percent of Pakistan’s goods exports risk losing access to key markets unless domestic firms adapt to the European Union and other major trading partners’ evolving demands on supply chain traceability and labour-standards reporting.
Meeting the required standard of compliance on these fronts, however, remains a formidable challenge. The sheer scale of the undocumented economy and the limited digital proficiency of farmers — who remain the backbone of many export sectors — create sizeable structural obstacles from the outset. And traceability is demanding by design. It requires transparent, verifiable records of every raw material, process, labour practice and environmental footprint across the supply chain. Few Pakistani firms possess the technological infrastructure or reporting systems needed to generate this level of documentation, let alone withstand audits by major markets. Without addressing these systemic gaps, aligning with global traceability and labour-standards regimes will remain a tall order, and it is clear that so far Pakistani firms have done little to begin the organisational, technological and managerial overhaul required to compete under these emerging norms.
Then there is the inordinate focus on producing and exporting low-value commodities, such as raw cotton and basic home textiles, and then channelling them into a few traditional markets, like the EU and the US. Meaningful efforts to embed Pakistani firms into global value chains have been rare. Even within the textile sector, there is little significant movement towards higher-value output. While countries like Vietnam and Bangladesh have rapidly shifted towards synthetic sportswear and finished clothing, our industry remains anchored in basic yarns and rudimentary apparel. Moreover, little investment has gone into research to understand shifting global demand or evolving consumer tastes. Pakistani businesses urgently need to break free from this low-value, low-growth trap and move beyond traditional textiles and basic commodities. A shift towards higher-value exports, buttressed by investments in branding, technological adoption, innovation and dependable supply chains, have become increasingly essential. We must take a leaf out of the book of regional peers like Vietnam and Indonesia, which leveraged these strategies years ago to build robust, high-value export industries.
The root of our challenges — whether navigating traceability requirements or moving into higher-value exports — lies in the outdated outlook of Pakistani businesses. They are still oriented around selling domestic surpluses abroad, rather than producing specifically and strategically for international markets. Businesses remain content to cater primarily to the domestic market, where standards and expectations are far less exacting. Consequently, there is minimal focus on improving product quality, refining processes, meeting rigorous reporting standards or innovating to align with global demand. It should be unacceptable for a country of Pakistan’s population size, talent and strategic location to remain stuck at the low end of global export markets. While the government has a definite role to play in creating an enabling environment for the private sector to flourish, Pakistani businesses must recognise their part in this striking underperformance and act decisively to alter it. They must embrace ambition, adopt modern production and management practices, and actively position themselves to compete on the global stage.
Copyright Business Recorder, 2025