Weak infrastructure and low productivity weigh on Pakistan's export sector

Pakistan's export sector continues to face deep-rooted structural challenges that are limiting its ability to diversify exports and compete in higher-value international markets, according to a report by the Pakistan Business Council (PBC).

The report said weak infrastructure, inefficient logistics, low productivity, regulatory bottlenecks and macroeconomic instability continue to undermine the country's export competitiveness despite significant opportunities in new product categories and emerging markets.

Infrastructure, logistics raise export costs

The PBC said weak transport infrastructure, inefficient logistics systems and high trade costs remain major barriers to export growth. Port inefficiencies, inadequate warehousing, limited cold-chain facilities and heavy reliance on road transport increase shipment costs and reduce the reliability of export supply chains, particularly for high-value and time-sensitive products.

According to the report, improving transport infrastructure, modernizing customs procedures and investing in logistics services are essential to lowering export costs and improving Pakistan's position in global markets.

Low productivity limits value-added exports

The report said Pakistan's exports remain concentrated in low- and medium-value products because of persistent productivity challenges, limited technology adoption and insufficient investment in innovation, branding and quality enhancement.

It noted that while Pakistan has established export strengths in several sectors, its competitiveness in developed markets is driven largely by lower production costs rather than product quality, innovation or brand recognition.

The report said strengthening value addition, improving product quality and investing in certification and branding are critical to expanding export earnings and reducing dependence on price-based competition.

Regulatory hurdles discourage exporters

The PBC said complex regulatory procedures, weak institutional coordination and high compliance costs continue to increase the cost of doing business and discourage export expansion.

Small and medium-sized enterprises (SMEs) are particularly affected by limited access to formal financing, cumbersome administrative procedures and difficulties meeting international certification and quality standards required by overseas buyers.

Economic uncertainty weakens investment

The report said recurring macroeconomic imbalances, exchange-rate volatility, inflation and rising production costs continue to create uncertainty for exporters and investors.

Frequent policy changes and inconsistent implementation also undermine long-term business planning and discourage investment in export-oriented industries, it added.

Weak global value chain integration

According to the report, Pakistan remains inadequately integrated into regional and global production networks, limiting opportunities for sustainable export growth.

The country continues to participate mainly in lower-value stages of production, while weak linkages with multinational supply chains and low export sophistication restrict diversification into higher-value industries.

Regional peers outperform Pakistan

Comparing Pakistan with major Asian economies, the report said countries such as China, Vietnam and India have developed broader export baskets and stronger participation in diversified global value chains.

Pakistan, by contrast, remains dependent on a relatively narrow range of export products, limiting its ability to benefit from emerging global trade opportunities.

New export opportunities identified

Despite these challenges, the report identified significant opportunities to diversify exports beyond traditional sectors.

Promising areas include industrial and intermediate goods, chemicals, plastics, fertilizers, processed foods, fisheries, fruits and vegetables, construction materials, light manufacturing and selected consumer products.

The report said developed markets offer higher-value opportunities but require greater compliance with international standards, stronger quality assurance and greater product differentiation. Regional and emerging markets, meanwhile, provide relatively easier access for price-competitive products and intermediate goods.

Recommendations

The Pakistan Business Council recommended shifting from broad sector-based incentives to product-specific export promotion focused on sectors with strong export potential, including processed foods, fisheries, pharmaceuticals, chemicals, light manufacturing and selected industrial products.

The report also called for greater investment in innovation, product quality, branding and certification to improve competitiveness, alongside modernizing transport infrastructure, customs systems and trade facilitation measures.

In addition, it recommended strengthening market intelligence through improved product-level analysis, buyer networks, trade promotion initiatives and market information systems to align Pakistan's exports with changing global demand and support long-term export diversification.