Imagine opening a small restaurant in Pakistan. Before you serve a single meal, you will deal with the food authority, the cantonment or municipal authority, the labour department, the environmental agency, the revenue office, the health inspectorate, and, depending on your district, several more. Each has its own form, its own fee, its own inspector, and its own timeline. None of them talks to the others. You have not yet cooked anything, and you are already exhausted. This is not an exaggeration for effect. During a review of domestic commerce regulation in Sindh, I found that approximately thirty-five distinct laws and regulations govern the ordinary conduct of business in a single province. Not thirty-five for the whole economy — thirty-five for one enterprise to navigate before it can trade with confidence. The problem Pakistani business faces is not any single bad law. It is the sheer density and fragmentation of the regulatory architecture that every reform, and every entrepreneur, must fight through. The consequences are now visible in the national accounts. Pakistan’s exports have fallen from around 16 percent of GDP in the 1990s to roughly 10 percent today, leaving the economy dependent on debt and remittances rather than production. Growth for the current fiscal year is projected at about 3 percent — a fragile recovery, not a takeoff. The World Bank, in its most recent assessment, names the causes plainly: high tariffs, cumbersome regulations, and costly energy and logistics. In other words, the machinery of the state is standing on the throat of its own economy. Imagine opening a small restaurant in Pakistan. Before you serve a single meal, you will deal with food authority, the cantonment or municipal authority, the labour department, the environmental agency, the revenue office, the health inspectorate, and, depending on your district, several more. Each has its own form, its own fee, its own inspector, and its own timeline. .. too many bodies, too little coordination, no single institution able to carry a reform across the system. I once sat with a textile manufacturer who had spent fifty years in the business — a man whose family had made cloth since before the country’s founding. He told me, without drama, that he was moving his capital into software, because his sons could run a technology firm from a laptop without a single inspector knocking on the door. That is what regulatory friction actually costs: not an abstract percentage of GDP, but the quiet exit of exactly the people the economy most needs to keep. And it points to something the current enthusiasm for technology tends to obscure. How Pakistan Pulled Off The Impossible—And Why Its Diplomatic Role Is Far From Over To understand how deep the problem runs, consider the institution that is supposed to govern commerce in Pakistan’s largest industrial province. When I reviewed it, the Directorate of Industries had no commerce-specific staff despite its dual mandate, a director’s post that had sat vacant for an extended period, and a governing document that still referenced legislation repealed decades earlier — including the Companies Act of 1913. A department was regulating a twenty-first-century economy with the ghosts of colonial statute. This is not corruption or bad intent. It is institutional incoherence: a state that has never rationalised the machinery through which it touches its own economy. Pakistan’s bet on information technology and artificial intelligence is, in this light, both its most promising move and its most revealing one. The promise is real: IT exports are among the country’s brightest prospects, the talent is genuine, and the government is right to back the sector. But it is worth asking why technology, of all sectors, has been able to grow so fast. Part of the answer is that it is the one part of the economy the old machinery has not yet reached — where a firm can build and export from a laptop without navigating the inspectors, licences and colonial-era forms that slow the factory and the farm. The lesson is not that IT succeeds where industry fails; it is that IT shows what Pakistani enterprise can do once the regulatory maze is out of its way. The task is to extend that freedom to the rest of the economy — not to leave technology as the single room in the house where the state’s own machinery cannot follow. The instinct in response is to call for “less government. ” That instinct is wrong, and it is worth being precise about why. Pakistan’s problem is not that the state does too much; it is that the state does it incoherently — too many bodies, too little coordination, no single institution able to carry a reform across the system. The answer is not a weaker state but a more coherent one. Where regulation is fragmented, the fix is not to remove regulation but to unify it. Pakistan’s Water Future Hinges On What Lies Beneath Its Rivers The countries that have pulled ahead understood this. Vietnam has risen from a low-cost sourcing hub into an export powerhouse, with textile and garment exports reaching an estimated 46 billion dollars in 2025 and set to overtake Bangladesh as the world’s second-largest garment exporter. It did so not by abandoning regulation but by simplifying and coordinating it — negotiating trade agreements, lowering tariffs, and building a predictable, single-window environment that investors could plan around. The lesson is not deregulation. It is coherence: a state that makes itself easy to deal with, on purpose. Bangladesh is the cautionary half of the same lesson. It built a formidable garment sector on facilitation and cost — but its recent political instability has stalled the very export growth it once took for granted, a reminder that gains built on a narrow base are not permanent, and that facilitation must be matched by institutional durability to last. Pakistan does not lack the diagnosis. It has commissioned ease-of-doing-business reforms, one-window schemes, and regulatory guillotines for years. What it lacks is the institutional coherence to make any of them stick — a single body with the authority to drive simplification across the dozens of departments that each guard their own slice of the regulatory maze. In my own work establishing regulatory reform mechanisms in provincial government, the recurring lesson was the same: a reform succeeds not when it is announced, but when an institution genuinely owns it and the system is coherent enough for someone to actually carry it through. That is the reform Pakistan has never quite made. Not less government, and not another policy document, but the unglamorous, decisive work of making the state coherent — of turning a thirty-five-law obstacle course into a single, navigable door. A country serious about a digital future has to be serious about the analogue machinery beneath it, because the same coherence that would let a software firm scale is what the restaurant, the factory and the farm have been waiting for all along. Until then, the tech sector will keep thriving in its one uncrowded room, the textile maker will keep moving his capital to follow it, and the wider economy will keep stalling before it starts. Pakistan’s Greatest Security Threat Is Its Economy
Pakistan Bets On AI. Its 1913 Rulebook Hasn’t Noticed.
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