
Uniting Pakistan: bridging provincial divides for shared prosperity
Pakistan is grappling with growing interprovincial tensions amid economic challenges. The divides between provinces are widening, particularly during times of general economic distress.
Balochistan's longstanding sense of alienation persists, Khyber Pakhtunkhwa (KP) requires careful attention to address its grievances, and Sindh is increasingly anxious about water scarcity due to planned canal diversions to the Cholistan region.
The government's Green Pakistan Initiative (GPI) aims to expand agricultural land and boost productivity, a commendable goal for a country classified as water-stressed and vulnerable to climate-induced droughts and floods. However, this year's low water availability has disrupted Sindh's crop cycles, threatening its agricultural economy. Across Sindh, people from diverse backgrounds are protesting, fearing long-term economic hardship.
Policymakers must adopt a more inclusive approach to development. Over recent decades, Punjab has received a disproportionate share of resources, widening the infrastructure and development gap with other provinces. Addressing this imbalance, particularly in Sindh, is critical.
Sindh is a resource-rich province, contributing significantly to Pakistan's energy sector. It produces the largest share of natural gas, hosts the Thar coal reserves driving increased power generation, and boasts a strong wind corridor with untapped renewable energy potential. Leveraging these strengths could transform Sindh into an economic powerhouse.
However, ongoing protests in Sindh have disrupted highways, stalling the movement of goods. This has led to losses for exporters and manufacturers, as raw materials fail to reach factories and finished products are delayed at ports. The Prime Minister's decision to pause the canal project until a consensus is reached is a positive step. Moving forward, a consultative approach that listens to the concerns of smaller provinces is essential for national unity. Punjab and Sindh, deeply interdependent, rely on each other—Punjab as a landlocked province depends on Sindh's ports for its supply chain.
To ensure fairness, Sindh should have a meaningful role in the green revolution. The GPI includes barren land in Sindh, and the federal government could prioritize deploying modern farming techniques there while ensuring adequate water availability. Simultaneously, improving law and order and governance in Sindh would foster economic growth and strengthen social ties with the rest of Pakistan. Likewise, KP's concerns regarding the mineral bill deserve attention, with provincial stakeholders engaged in decisions about mining and mineral development.
Economic vibrancy depends on inclusive development from Khyber to Karachi. While Punjab benefits from robust road infrastructure and new motorway projects, connectivity from upcountry to Karachi lags behind. Prioritizing these routes could yield significant economic gains and improve livelihoods in Sindh.
Pakistan stands at a critical juncture, with its economy struggling to overcome low growth and unemployment. According to the World Bank, 10 million people face acute food insecurity in 2025, and 2 million more have fallen into poverty this year, with low labour engagement exacerbating the crisis. Poverty rates are starkly higher in smaller provinces: 70 percent in Balochistan, 48 percent in KP, 45 percent in Sindh, and 30 percent in Punjab, according to a PIDE study. These disparities underscore the urgent need for equitable development in provinces with higher poverty rates. Without it, frustration and alienation may deepen, further undermining cohesion and deterring investment.
By fostering dialogue, prioritizing equitable resource allocation, and investing in underdeveloped regions, Pakistan can build a stronger, more united future. The path forward lies in collaboration and inclusivity, ensuring every province has a stake in the nation's progress.
Copyright Business Recorder, 2025

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Business Recorder
20-05-2025
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LAHORE: Pakistan's textile industry is rapidly deteriorating as, for over 10 months now, the government has failed to address the fatal anomaly in the Export Facilitation Scheme (EFS). The result is a deeply distorted tax regime that has rendered domestic manufacturing uncompetitive, gutted local supply chains, and handed Pakistan's textile value chain over to foreign suppliers. The Export Facilitation Scheme allows exporters to import raw materials and inputs at 0% sales tax but imposes 18% tax on the same inputs if they are made in Pakistan. It's an irrational, self-destructive policy that punishes domestic production and rewards imports. While the sales tax is refundable, there are high time, administrative and liquidity costs associated with refunds. Sales tax is paid when an input is procured, and the claim for refunds can only be filed once the product has been manufactured and exported — a 6 to 10 month cycle at least. Add to that administrative costs associated with filing, follow-ups, and regular harassment by the FBR. According to the data shared by All Pakistan Textile Mills Association there is a huge liquidity cost as capital becomes stuck in the sales tax regime during the 6-10 month production cycle. Once claims are filed, even though Sales Tax Rules mandate refund issuance within 72 hours, only partial refunds of 60-70% are issued once a month. The remaining amount is deferred for manual processing where there is already a backlog of over Rs 110 billion, and no progress on clearing it over the last 4-5 years. As a result, exporters have switched to imported inputs. Monthly yarn imports are over twice the historic peak (figure 1), expected to hit 300 million kg in FY25—nearly triple the 108 million kg in FY24. In total, imports of just three key raw materials— cotton, yarn, and greige fabric — are expected to be $1.5 billion higher than last year (figure 2). Meanwhile, exports are only projected to increase by $1.14 billion. More dollars are flowing out of Pakistan than coming in. The headline export figure is a facade; underneath, the industry is hollowing out. Over 800 ginning factories and 120 spinning mills have shut down, and millions of livelihoods lost. The crisis has reached the weaving sector, with looms shutting down and workers protesting on the streets. While the government chases headline numbers, it ignores that the value added in exports is increasingly foreign, and Pakistan is effectively exporting imported goods while local industry, jobs, and investment vanish. The crisis is not just limited to industry. Cotton season begins next month. Who will buy 10 million bales from farmers without a functional spinning industry? Cotton output has already fallen from 15 million bales in the mid-2010s to around 5–10 million today. While commendable steps have been taken — such as lifting the cotton seed import ban and introducing modern farming techniques under the Green Pakistan Initiative — the single biggest obstacle to cotton revival remains the current sales tax regime. Pakistani cotton is taxed at 18%, while imported cotton enjoys a sales tax-free path through EFS. Even cottonseed and cottonseed cake—basic agricultural byproducts — face an 18% sales tax, a practice unheard of globally. Given elastic demand, farmers must absorb the high tax burdens, pushing their incomes below cost of production. As the spinning sector — the primary consumer of cotton — has largely been deindustrialized by the EFS anomaly, demand for cotton has severely plummeted. With uncertain demand and no support price, there is high uncertainty regarding profitability of cotton, and farmers are shifting towards alternate, water intensive crops with severe implications for Pakistan's already scarce water resources. Destruction of the cotton sector will put millions more livelihoods at risk, especially women in cotton picking, etc. who have very few alternative sources of employment. The government has stood by — unmoved and indifferent — as the textile and cotton value chains bleed to their final demise. For nearly a year, it has failed to restore the EFS to its June 2024 form with zero-rating on local inputs. Despite repeated appeals, no action has been taken. We repeat, clearly and unequivocally: The government must immediately remove yarn and fabric from the EFS import scheme. This is the only way to halt the destruction of Pakistan's textile industry. Pakistan's export economy cannot be built on imported yarn and fabric. No country has industrialized by destroying its own supply chains, replacing them with imports. Uraan Pakistan will not happen on the grave of local industry. Copyright Business Recorder, 2025


Express Tribune
29-04-2025
- Express Tribune
In abeyance
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