For nearly two decades, Pakistan’s exports have remained stuck between $25–30 billion, despite repeated declarations that export-led growth is central to economic revival. Over the same period, Bangladesh has crossed $50bn, while Vietnam now exceeds $350bn. This widening gap is not the result of global shocks or bad luck. It reflects domestic policy choices that have made exporting costly, uncertain, and unrewarding — while protecting inefficiency at home. Macroeconomic instability as a built-in disadvantage Successful exporters require stable costs and predictable policy. Pakistan offers neither. Recurrent balance-of-payments crises trigger abrupt stabilisation programmes, policy reversals, and stop-start incentives. Exchange-rate management has been particularly damaging. Periodic overvaluation to contain inflation acts as a hidden tax on exports, eroding competitiveness. When corrections eventually occur, they are sharp and disruptive, driving up input costs and debt servicing. Exporters are forced to operate in an environment where profitability can disappear overnight. Exporters taxed as revenue sources Pakistan’s export sector faces one of the most punitive tax regimes in the region. Exporters pay advance income tax, minimum turnover tax, super tax, and multiple withholding taxes across supply chains, while sales tax and duty drawback refunds are routinely delayed. This effectively turns exporters into involuntary lenders to the state, tying up working capital and raising borrowing costs. Smaller and mid-sized exporters — essential for diversification — are hit hardest. In competing economies, exports are genuinely zero-rated, with automated refunds and minimal compliance burdens. In Pakistan, exporters are taxed first and refunded later — if at all — despite already having to self-provide basic infrastructure, security, and logistics. This fiscal approach treats exports as a short-term revenue stream rather than a long-term growth strategy. Energy costs that destroy competitiveness High and unpredictable energy prices further undermine export viability. Industry cross-subsidises domestic consumers, absorbs losses from theft and inefficiency, and pays capacity charges for unused generation. Penalising captive power to force grid usage has reduced industrial flexibility while merely shifting circular debt from electricity to gas. Given Pakistan’s concentration in low value-added exports, where energy is a large cost component, this disadvantage is decisive. Low value-added exports Pakistan’s export base remains narrow and low value. Textiles dominate, but largely at the yarn, fabric, and basic garment level — segments with thin margins and intense competition. Some firms have exited higher value-added apparel altogether, whilst others are contemplating relocating production abroad. By contrast, Bangladesh invested in scale, compliance, and female labour participation to move up the garment value chain, while Vietnam diversified into electronics, engineering, and services. Global demand is also shifting away from cotton toward man-made fibres, weakening Pakistan’s traditional advantage. Without deliberate upgrading, innovation, and branding, export diversification will remain elusive — even as Pakistan’s land, water, and human capital offer opportunities in horticulture, livestock, dairy, seafood, minerals, information technology, and professional services. Weak standards Food and agricultural exports face persistent quality and hygiene challenges. Inadequate domestic testing facilities force exporters to rely on foreign laboratories, raising costs and delays. Training and certification infrastructure remain underdeveloped. While exporters are allowed to open overseas marketing offices, funding limits are too low to support brand development or to secure shelf space. As a result, Pakistani brands have minimal global presence outside diaspora markets. Protectionism that rewards inefficiency High tariffs and ad-hoc import restrictions raise input costs and disrupt supply chains. Recent changes under the Export Facilitation Scheme — denying refunds on certain imported inputs — further penalise exporters. Protection has encouraged firms to prioritise secure domestic margins over global competitiveness. Medium-sized exporters, lacking inventory buffers, suffer most. Domestic consumers pay higher prices for lower-quality goods, while protected firms rarely evolve into serious exporters. Productivity and skills gaps No incentive can compensate for low productivity. Pakistani firms face unreliable energy, inefficient logistics, and shortages of technical, managerial, and digital skills. While Vietnam benefits from a disciplined workforce and Bangladesh from broad labour participation, Pakistan continues to underinvest in human capital limiting its ability to upgrade exports. Policy inconsistency and weak credibility Perhaps the most damaging constraint is policy credibility. Export policies are announced without consultation, applied unevenly, and reversed under fiscal pressure. Temporary incentives and shifting rules discourage long-term investment. Export growth requires confidence that policies will endure beyond the next crisis. Both the government and businesses must change While policy failures dominate, the private sector also bears responsibility. Too many firms focus on lobbying for protection rather than investing in competitiveness, innovation, and new markets. Despite duty-free access to the European Union and UK, Pakistan’s textile market share has stagnated, while China and Vietnam, despite tariffs, have expanded through superior cost, quality, and reliability. Pakistan will not scale exports through episodic devaluations, temporary incentives, or punitive taxation disguised as reform. What is needed is macroeconomic stability, a predictable and competitive exchange rate, affordable energy, rationalised tariffs, a truly zero-rated export regime with automatic refunds, and sustained investment in skills. Until exports are treated as central to economic survival rather than a revenue afterthought, ambitious targets — such as $63bn — will remain out of reach. The writer, a former CEO of Unilever Pakistan and of the Pakistan Business Council, serves on the boards of several public companies. Published in Dawn, The Business and Finance Weekly, January 12th, 2026