For years, the economy has been constrained by an excess of rules, permits, approvals
Pakistan has seen many sound reform plans falter at the implementation stage. Sustained political backing, capable institutions and rigorous monitoring will be essential. Photo: file
ISLAMABAD:
Last week’s launch of a wide-ranging regulatory reform initiative may prove to be one of the most consequential economic reforms in decades. This is not about marginal adjustments. It marks a fundamental shift in how the state views its role, from controlling economic activity to enabling it. If carried through with seriousness and vigour, these reforms could unlock investment, create jobs, and place Pakistan on a more durable growth path.
For years, Pakistan’s economy has been constrained by an excess of rules, permits and approvals. Starting or expanding a business has often meant navigating multiple offices, unclear procedures and prolonged delays. Exporters and manufacturers face layers of compliance that add cost without adding value.
This system does more than waste time. It encourages informality, rewards connections over competence, and creates opportunities for rent-seeking. A recent IMF diagnostic report explicitly identifies complex regulation as a key driver of these distortions, with ordinary citizens and honest businesses bearing the cost.
The Board of Investment’s SMART (Sectoral Mapping & Regulatory Transformation) initiative, with the support of the UK government-funded REMIT project, seeks to address these problems at their root. The programme can quantify reductions in regulatory burden, improvements in service delivery, and tangible investment outcomes, all benchmarked against both a baseline and international peers.
Backed by both federal and provincial governments, it is based on a detailed review of hundreds of regulations. The approach is straightforward: retain what is necessary, remove what is outdated, and simplify what remains. Many approvals are being abolished. Low-risk activities are being freed from prior permissions. Processes are being shifted online to reduce paperwork, discretion and delay.
The scale of impact is significant. Earlier, a single medical device registration would take more than 872 days. This has now been reduced to just 21 days. Over six hundred thousand paper documents will no longer be required each year. Thousands of hours currently spent chasing signatures and stamps will be saved. This is reform measured not in slogans, but in time saved, costs reduced, and frustration avoided.
At the centre of this effort is the Asaan Karobar Act 2025. It introduces a new regulatory philosophy. Rules must be clear and predictable. Licences should be simple to obtain and renew. Decisions should be based on objective criteria rather than discretion. Digital systems should replace face-to-face interaction wherever possible.
For small traders and young entrepreneurs, this lowers the barriers to entering the formal economy. For established firms, it enables faster expansion and smoother operations. Reducing human discretion in approvals also strikes directly at the points where bribery and favouritism typically occur.
Political leadership has rightly underscored the importance of this initiative. The prime minister has described it as a ‘quantum leap’ towards improving Pakistan’s investment climate, while his special assistant on investment has called it a turning point. These assessments are not exaggerated. Independent estimates suggest that direct savings from reduced compliance costs could amount to hundreds of billions of rupees annually. The broader gains, through higher investment, faster firm growth, increased exports and greater innovation, could be even larger.
Design, however, is only the first step. Pakistan has seen many sound reform plans falter at the implementation stage. Sustained political backing, capable institutions and rigorous monitoring will be essential. Resistance should be expected. Complexity benefits entrenched interests, and simplification threatens them. The Cabinet Committee on Regulatory Reforms has already approved 472 reforms in various sectors to be implemented.
The stakes are high. Pakistan’s weak growth and persistent poverty are not accidents. They are the outcome of an economic system built around control rather than creation. When entrepreneurs spend more time dealing with officials than improving products, productivity suffers. When honest firms struggle to comply while connected ones prosper, competition erodes. By freeing economic activity from unnecessary controls, the state can release energy that already exists across the economy.
Formal businesses will expand, generating jobs and broadening the tax base. Foreign investors, long deterred by unpredictability, will encounter a more transparent and stable environment. Most importantly, opportunity will shift away from privilege towards ideas, effort and efficiency. That is the foundation of sustainable growth. This is how countries escape stagnation and move towards inclusive prosperity. Regulatory reform is not merely about making it easier to do business. It is about empowering citizens, trusting markets to operate within fair and clear rules, and redefining the state as a partner rather than a gatekeeper.
Pakistan now faces a clear choice. It can persist with a model that constrains and controls, or it can commit to one that enables and grows. By staying the course on regulatory reform, Pakistan can choose growth over stagnation, fairness over privilege, and a future in which its economic potential is finally realised.
The writer is a member of the Steering Committee for the Implementation of the National Tariff Policy 2025-30. Previously, he has served as Pakistan’s ambassador to the WTO.
