Restoring Pakistan's confidence

For quite some time, every businessman, economist and entrepreneur has argued, with urgency and frustration, that Pakistan’s economic crisis is not just a story of numbers, deficits, debt or macroeconomic volatility. It is primarily concerned with a crisis of confidence and incompetence.

This is an outcome of a governance mindset that treats business owners as villains, wealth creation as a crime and enterprise as a suspect. Today, businesses in Pakistan are facing tax burdens exceeding 55%. One must ask a very simple question: how can anyone engage in business activity, let alone thrive or initiate? In a situation where it is impossible to fulfil compliance and the enterprise's profitability is considered immoral, what kind of economic ecosystem are we trying to build?

Bureaucratic intimidation, regulatory overreach and excessive taxation are making it impossible for companies to operate. This approach is suffocating local entrepreneurs, forcing them to move to Dubai and compelling multinational companies to leave Pakistan. Home no longer feels like home as the environment of despair is at an all-time high towards business activity. How can we foster an investment culture when we mock our businessmen as tax thieves, offer no mechanisms for facilitation, no respect and have no idea about their risks and their role in job creation? They are also expected to support the entire economy and still being treated as prime suspects.

All this did not happen overnight; it is the ultimate outcome of policies made over decades by officials who have never risked their personal capital or run a business. 

The reasons are straightforward: their lives are built around control, command, and coercion, and because of this attitude, they have no understanding of private-sector dynamics. It is against ethical governance principles that the same institutions design the policies that are also entrusted with enforcement and accountability. For instance, first the FBR makes the rules, then they interpret them, and then they penalise citizens under the same rules. The outcome is visible in all sectors across the economy.

By continually amending the constitution, the question arises: will the problems Pakistan is facing be fixed solely by constitutional amendments? Will the economy revive because the constitution was amended yet again? Will businesses regain confidence because parliament found new phrases for old scenarios? History tells us that nations do not excel by paper reforms; they flourish when they are served and their citizens are trusted with honesty and opportunity. They only progress through confidence, not coercion.

And above all, now we must also confront the IMF’s latest report. The report highlights nothing new but the crises in the structure of our governance system. It raises the same issues we have been facing for over four decades. It speaks about the powerful mafias: sugar, real estate, commodity, energy etc.

It shows how these mafias bend the law at will and are given 168 SROs even after parliament passed the budget. It tells us that we have two Pakistans: relaxed rules for the powerful and suffocating for the weak. The report is a mirror which we are reluctant to look into because then we have to confront our own fiascos.

Pakistan has potential and is a land of opportunity; look at any leading private sector business group in Karachi or Lahore, and you will find countless success stories. Private-sector banks are profitable, dairy businesses are rewarding, cement plants are profitable, automotive ventures are successful, and malls are profitable and thriving. Actually, every sector they enter becomes a success story, proving that the problem is not the country’s potential but the state’s refusal to reform. Now compare that with government entities: PIA is bankrupt; healthcare is drowning; public schools are below average in results; the steel mills have collapsed. In fact, every state-run enterprise bleeds billions of taxpayer money.

Everyone is asking why the private sector succeeds where government institutions fail. This is because the private sector builds value, accountable to markets and customers, whereas the government is complacent and accountable to no one. It is incompetence, corruption and a system that appoints incompetent people because of political affiliation. The ultimate result: no one is held responsible for failure, and even if they are, courts grant a stay order.

We do not doubt our leadership’s intention, but if they have clarity of thought and sincerity of purpose, then they should immediately revoke the super tax and reduce the corporate tax rate to 25%. 

It is nothing Pakistan-specific but a global benchmark for economies that invite investment. It is not a prudent course of action to invest in a system that involves uncertainty about policies, excessive taxation, bureaucratic harassment and no recourse to alternative dispute resolution.

Vietnam, the UAE, Malaysia, Bangladesh and even India are ahead of us. why? Because they have empowered and encouraged their entrepreneurs, reduced the state’s footprint, and respected and trusted their people. And money-making is not a criminal offence in these countries; in fact, they celebrate profit-making. Whereas in Pakistan, we have choked enterprise through red tape, useless and endless inspections, tax harassment and useless approvals that serve no purpose other than making rich those enforcing them.

We have created a hostile environment where making money in the private sector is suspicious, but making money through government positions is acceptable. Recently, our airports have become checkpoints of humiliation where passengers, even with valid visas and documentation, are still stopped. Why? Certainly not because of policy, but because of the greed of officials at the airport. The cancer of bribery and speed money culture has destroyed every institution, leaving citizens humiliated, exhausted and disheartened.

Despite an exemplary civil-military relationship, with even the US president applauding our leadership, the marvellous Pak-Saudi defence pact, our macro-economic indicators looking better, our stock market breaking records daily, why is unemployment rising and poverty increasing? Why are investments stagnant? 

Why is the drift towards internal instability and violence re-emerging along our eastern and western borders? Why do negotiations with the Afghan Taliban appear hopeless and our soldiers are bleeding? These are not concerns of geopolitics but questions about our governance mechanism, lack of reforms, absence of merit and outdated bureaucratic mindset that has stifled the nation instead of serving it.

Pakistan is facing a historic confidence crisis, where people feel that they have been overlooked and marginalised in ways that undermine their hope for the future and their capacity to realise their own dreams. It is alarming when a nation loses faith in its future; no government statement, constitutional amendment, media management or stock market rally can restore hope.

The stakes are high and clear. With clarity of purpose and uncompromising leadership, we must choose a path and decide whether we want to continue with an incompetent, authoritarian administrative culture that fears an empowered citizenry, or we want a leadership model based on trust, reforms, facilitation and partnership. The incompetence in bureaucratic governance destroys even well-intentioned initiatives, while empowering governance embraces it.

Let’s hope that 2026 will be a year of decisive repositioning for Pakistan, built on competitiveness, production and national discipline rather than administrative firefighting. But for this, we must work together. The private sector must embrace a disciplined, export-driven, investment-led growth model. The government must realise that exchange rate correction towards fair value (Rs250-255) is necessary to cut inflation and restore credibility; interest rates cut to 7.0% must follow once price stability is achieved. Tax reforms need to shift towards the undocumented economy rather than the already overburdened formal sector. FDI revival demands a corporate tax cut to 25% and the elimination of the super tax. To engage people and revive their hope in the system, the government must implement strict austerity measures across its departments. There must be an absolute moratorium on politically motivated development schemes.

We must realise that only decisive actions will restore Pakistan’s economic sovereignty. This shall only be possible through reforms – and reforms will certainly not come through constitutional amendments, political speeches, PID or military press conferences. They will come from a new governance philosophy that will empower the people of Pakistan to build, prosper, dream and flourish. This is the only route possible to restore hope, confidence and revival of economic and national dignity.

The writer is a political economist, public policy commentator and advocate for principled leadership and regional cooperation across the Muslim world.

Disclaimer: The viewpoints expressed in this piece are the writer's own and don't necessarily reflect Geo.tv's editorial policy.

Originally published in The News