FOR decades, Pakistan’s efforts toward industrial localization and export growth were constrained by high structural, energy and regulatory barriers, alongside heavy import dependence but some developments indicate the planners and the decision-makers have started showing the required level of sensitivity to these issues. While Chinese conglomerate Transsion Holdings has outlined plans to expand its investment in Pakistan and move beyond assembly into component manufacturing, Advisor to the Prime Minister for Industries and Production Haroon Akhtar Khan has said that the government was working on a Mobile and Electronics Device Manufacturing Policy (2026-33) to promote domestic manufacturing, attract investment and strengthen the industry, prioritizing a move beyond assembly towards comprehensive manufacturing of mobile phones and devices. In a related development, the Pakistan Institute of Development Economics (PIDE) has called for a more export-focused approach to trade agreements, saying Pakistan’s imports from regional trade agreement (RTA) partners have grown far faster than its exports since 2000. At the same time, through the efforts of Minister for Maritime Affairs Junaid Anwar Chaudhry Pakistan has been removed from the list of high risk maritime areas, which will help reduce shipping cost.
We have been emphasizing in these columns that the relevant ministries demonstrated criminal negligence towards implementation of provisions of policies and agreements relating to local manufacturing as well as transfer of technology and as a result Pakistan has been forced to spend heavily on imports of plants, machinery and their parts. The most neglected was the auto sector where localization remains insignificant despite protective policies and liberal incentives offered by the successive governments. In this backdrop, it is appreciable that the proposed Autos and Auto Parts Manufacturing Policy (2026–2031) targeting increased component localization and multi-billion-dollar export goals – seek to transition industries away from simple import-dependent assembly toward deeper domestic supply chains. There was also dire need to take measures for local production of mobile phones, laptops, computers and other widely used IT and telecom devices but unfortunately so far we were content with local assembly of the items that will continue to remain in high demand.
The commitment of the Transsion to invest on local manufacturing of phone parts augurs well but the policy for the purpose should be finalized at the earliest to pave the way for accelerated localization of phones and their components. The report of the PIDE on issues hindering meaningful increase in exports also mirrors our inability to effectively safeguard Pakistan’s trade and economic interests during conclusion of agreements with other countries and firms. This is confirmed by the finding that imports from RTA partners had increased much faster than exports since 2000 and as a result, every dollar’s worth of imports is now matched by only about 20 cents’ worth of exports. The report proposes an Export-Oriented RTA Framework based on export-focused negotiations, alignment with industrial policy, demand-based selection of trading partners, improved access for products subject to sanitary and phytosanitary (SPS) requirements alongside tariff reductions, deeper trade agreements and performance reviews based on key performance indicators (KPIs) at the Ministry of Commerce. It is also a reality that chronic power crises, soaring electricity tariffs and volatile fuel prices inflate the cost of domestic manufacturing, eroding international price competitiveness. No doubt, the Government is collecting more revenue but its policies are increasing the cost of production and harming interests of the common man. Inefficient port operations, weak transport infrastructure, limited cold-chain facilities and high transit costs increase shipment delays and unreliability. Similarly, exchange rate volatility, frequent shifts in regulatory frameworks and complex, multi-agency compliance processes create unpredictability for investors and exporters. The relevant ministries and departments should demonstrate the same level of spirit in addressing these challenges as the Maritime Affairs ministry did in enhancing competitiveness of Pakistani exports and strengthening confidence of international investors.
