Pakistan Implements Tariff Reform to Boost Exports
Pakistan knows that a country that does not export is a country that does not grow. That is why, in an effort to revive its economy, the government has approved a tariff reform to be implemented over five years. The objective: to reduce import tariffs and eliminate the protectionist barriers that the country has traditionally put in place. If all goes according to plan, the measures will be implemented as of July 1.
With the reform, the government hopes to boost remarkable growth in imports and attract investment in key sectors. However, the government is facing opposition from traditional and long-established domestic industries that are resisting the idea of losing market share.
The executive reduces the tariff from the current 19% to 9.5% over five years. The tariff will be applied in tranches (0%, 5%, 10%), with a maximum tariff of 15%, eliminating the peaks that currently exceed 20%. Tariffs ranging from 2% to 7% will be phased out, as well as regulatory tariffs ranging from 55 to 905.
This reform comes at a time when the country's economy needs air. According to the latest World Bank report, Pakistan's exports accounted for 15% of the country's GDP in the 1990s, while they were 10% in 2024, a decline of five percentage points. These figures contrast with those of neighboring countries, such as India, whose exports account for nearly 30% of its GDP, or Sri Lanka, where they represent 20%.
The country's exports are dominated by textiles, with Bangladesh, Cambodia, Pakistan and Vietnam alone accounting for 18% of fashion exports, which are at serious risk if these countries do not take rapid action to adapt to climate change.
Pakistan's exports, on the other hand, depend on a few markets, mainly led by the United States, Europe, the United Kingdom and China. In recent years, however, its national strategy has been to increase import tariffs and implement new taxes to protect local industries. These measures have reduced the productivity of domestic firms and weakened export competitiveness.
This is not the first action the Pakistani government has taken to boost its export sector. Last year, it launched a program aimed at increasing exports by 6% by 2028 by encouraging public-private initiatives and investment in sectors such as agriculture, ICT and renewable energy.
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