Pakistan is preparing to take a significant step toward strengthening its position in the global digital landscape, with the country expected to become the first signatory of the Digital and AI Compact at the Global AI and Digital Summit 2026 in South Korea. The development highlights Pakistan’s growing focus on artificial intelligence, digital transformation, and international cooperation in emerging technologies.

Federal Minister for Information Technology and Telecommunication Shaza Fatima Khawaja has travelled to South Korea to represent Pakistan at the international gathering. The summit will bring together representatives and policymakers to discuss the future of artificial intelligence, digital development, and equitable access to technology.

Pakistan to Present Its Vision for AI and Digital Transformation

A key part of Pakistan’s participation will be the presentation of its national roadmap for digital transformation and artificial intelligence. During a dedicated session on the Digital and AI Compact, Minister Shaza Fatima is expected to outline the country’s plans for adopting emerging technologies and expanding digital services.

Pakistan’s participation reflects its efforts to strengthen its digital infrastructure, encourage technological innovation, and improve access to modern digital solutions. Artificial intelligence is increasingly influencing industries, public services, education, healthcare, and economic development, making international collaboration an important part of national technology planning.

By presenting its priorities at the summit, Pakistan will have an opportunity to communicate its ambitions for building a more connected and technologically advanced society.

Meetings with Google and World Bank Officials

Alongside the summit proceedings, the IT minister is scheduled to hold important bilateral meetings with senior representatives of Google and the World Bank.

Her planned meeting with Google’s vice president is expected to focus on areas of mutual interest and potential cooperation. Discussions with the global technology company could provide an opportunity to explore ways to support Pakistan’s digital ecosystem and technological development.

The minister will also meet the World Bank’s vice president to discuss possible collaboration in digital and technology-related sectors. Such engagement could help identify opportunities for supporting digital infrastructure, expanding access to technology, and promoting sustainable digital development.

These meetings demonstrate the importance of partnerships between governments, international financial institutions, and global technology companies in advancing digital transformation.

Digital Inclusion Remains a Key Priority

An important theme of the summit will be ensuring that the benefits of digital technology reach people across different communities. Minister Shaza Fatima is expected to participate in discussions on fair access to the internet and digital services, with particular attention to digital inclusion.

For Pakistan, improving connectivity and widening access to digital opportunities remain important challenges. Affordable internet access, digital literacy, and the availability of reliable online services can help individuals, businesses, students, and communities participate more effectively in the digital economy.

Artificial intelligence also presents opportunities to improve productivity, support innovation, and enhance public service delivery. However, these benefits depend on responsible adoption, appropriate infrastructure, and access to the skills required to use emerging technologies effectively.

Why the Digital and AI Compact Matters for Pakistan

Becoming the first country to sign the Digital and AI Compact, if completed as anticipated, would represent a notable moment in Pakistan’s international digital engagement. It could strengthen the country’s visibility in discussions about the future of AI and digital cooperation.

The broader significance will depend on how Pakistan translates its commitments into practical initiatives. Effective implementation, investment in digital skills, stronger infrastructure, and cooperation with international partners will be essential to achieving meaningful results.

The summit also provides an opportunity for Pakistan to learn from international experiences and contribute to discussions about making artificial intelligence and digital services more accessible.

A Step Toward a More Connected Future

Pakistan’s participation in the Global AI and Digital Summit 2026 reflects its ambition to play a more active role in the evolving global technology landscape. The expected signing of the Digital and AI Compact, together with planned discussions involving Google and the World Bank, places digital transformation and international collaboration at the center of the country’s agenda.

While international commitments can open new doors, long-term progress will depend on turning policy goals into measurable improvements for citizens and businesses. With sustained investment, effective implementation, and a strong focus on digital inclusion, Pakistan has an opportunity to expand its technological capabilities and build a more inclusive digital economy.

The summit could therefore serve as an important platform for advancing Pakistan’s digital ambitions and strengthening its engagement with the global AI community.

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Pakistan’s federal government is considering major changes to the country’s tax administration, including the possibility of establishing a new tax collection agency or further restructuring the Federal Board of Revenue (FBR). The move comes amid concerns over revenue performance and the limited results of previous reform efforts.

Prime Minister Shehbaz Sharif has directed the FBR to prepare a comprehensive reform plan by October 19, covering human resources, institutional restructuring, and administrative improvements. The proposals are expected to help the government determine how Pakistan’s tax collection system can become more effective.

Government Explores Options for Tax Administration Reform

The idea of creating a separate national tax collection agency was discussed during a high-level government meeting held last Saturday. Following the meeting, FBR Chairman Rashid Langrial instructed officials to prepare recommendations for consideration by the prime minister.

However, the government has not yet made a final decision. Discussions are still at an early stage, and officials are examining different approaches to improving the existing system before determining the next course of action.

According to reports published by The Express Tribune, the FBR is working on proposals in line with the prime minister’s instructions. The board has indicated that the current emphasis remains on strengthening existing operations through staffing changes, improved technology, and more efficient administrative procedures.

The FBR has also dismissed speculation that tax collection responsibilities could be handed over to a private company.

What Could a New Tax Agency Mean for the FBR?

One proposal under consideration involves establishing a separate tax collection organisation while allowing the FBR to continue operating alongside it. Under this arrangement, employees who do not move to the new institution could remain in their existing positions until retirement.

Such a change would require significant legal and administrative adjustments. Establishing a new agency with powers currently held by the FBR could involve amendments to the Federal Board of Revenue Act, 2007, as well as changes to other relevant tax laws.

The final structure will depend on the government’s assessment of the available options and the recommendations submitted by the FBR.

Previous Reform Efforts Have Yet to Resolve Key Challenges

Pakistan has attempted to modernize its tax administration several times over the past two decades. These initiatives have included transforming the Central Board of Revenue into the FBR, reorganizing employee service structures, and introducing changes to the institution’s operational framework.

In 2024, the government also launched a transformation programme worth more than Rs55 billion to improve the tax system. An earlier proposal under the caretaker government sought to separate Customs operations from Inland Revenue functions.

Despite these efforts, concerns about revenue collection and the country’s narrow tax base remain central to the government’s economic agenda. The latest discussions reflect another attempt to address longstanding structural challenges within the tax administration.

Pakistan Faces Pressure to Increase Tax Revenue

The proposed reforms come at a time when Pakistan is under pressure to strengthen public finances and improve domestic revenue generation.

The country’s tax-to-GDP ratio stood at 10.3% in the previous fiscal year, while the FBR collected more than Rs1.1 trillion less than its original annual target. These figures highlight the gap between the government’s revenue ambitions and actual collection performance.

For the current fiscal year, the government has set an ambitious tax collection target of Rs15.263 trillion. Achieving this goal would require revenue growth of more than 17%, placing additional pressure on the tax administration to improve compliance and collection efficiency.

Expanding the number of taxpayers, reducing tax evasion, improving documentation of economic activity, and making tax procedures more transparent are among the broader issues facing Pakistan’s revenue system.

Technology and Administrative Changes Could Play a Key Role

Whether the government establishes a new agency or restructures the FBR, the effectiveness of the reforms will depend on their implementation.

Better digital systems could help identify undeclared economic activity, improve monitoring, and reduce opportunities for errors or manipulation. Clearer accountability mechanisms and more efficient internal processes could also support better performance.

At the same time, institutional restructuring alone may not be sufficient to address the country’s revenue challenges. Sustainable improvements will also depend on broader tax policy, compliance, public confidence, and the government’s ability to bring more economic activity into the documented tax system.

October 19 Deadline Could Shape the Next Phase

Prime Minister Shehbaz Sharif is expected to review the FBR’s reform proposals on October 19. The review could help clarify whether the government intends to retain the existing institutional structure with significant changes or move towards creating a separate tax collection agency.

For now, the proposal remains under consideration, and no final policy decision has been announced.

The outcome could have important implications for Pakistan’s tax administration, government revenue, and the way individuals and businesses interact with the tax system. The key question is whether the proposed changes will deliver lasting improvements in tax collection, institutional accountability, and compliance.

Ultimately, the success of the reform process will be measured not simply by the creation of a new organization or changes to the FBR’s structure, but by its ability to produce more consistent revenue growth and a more transparent, efficient tax system.

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Pakistan’s agricultural sector could see significant changes under a new proposal by the Securities and Exchange Commission of Pakistan (SECP) to establish a national agricultural spot market. The proposed initiative aims to create a more organized system for buying and selling agricultural commodities while helping farmers secure better prices, reduce crop wastage and obtain financing through formal channels.

The planned digital marketplace would bring farmers, commodity buyers, warehouse operators and banks onto a common platform. By introducing transparent trading procedures and modern storage arrangements, the initiative seeks to address some of the longstanding problems affecting Pakistan’s agricultural supply chain.

SECP Introduces a New Vision for Agricultural Markets

SECP Chairman Dr Kabir Ahmed Sidhu presented the proposal at the Pakistan Institute of Development Economics’ international conference, “Mission 100 Billion Dollars.”

The proposed system would rely on digital trading, standardized commodity grading and electronic warehouse receipts to improve the efficiency of agricultural transactions. Rather than depending entirely on traditional market arrangements, farmers could access a more transparent mechanism for finding buyers and negotiating prices.

Under the suggested framework, provincial authorities would continue regulating agricultural markets, while the SECP would help develop the technological systems needed to support the initiative.

The proposal reflects an effort to modernize agricultural commerce and establish stronger links between farming, financial services and commodity markets.

Reducing Agricultural Waste Could Deliver Major Economic Benefits

Crop losses after harvesting remain a significant challenge for Pakistan. Inadequate storage, inefficient transportation and limited access to suitable facilities can force farmers to sell produce quickly or allow crops to deteriorate before reaching consumers.

According to figures presented by the SECP chairman, post-harvest losses are estimated at between 20 and 40 per cent. With crop production valued at approximately Rs8.8 trillion, these losses represent a substantial economic burden.

Agriculture accounts for around 23.44 per cent of Pakistan’s gross domestic product, making improvements in this sector important for rural livelihoods and overall economic performance.

Sidhu estimated that reducing crop losses by just one percentage point could preserve approximately Rs88 billion in economic value.

Expanding storage facilities and improving supply chain management could therefore help farmers retain more of their produce, reduce unnecessary waste and increase the availability of agricultural commodities in domestic markets.

Limited Storage Capacity Remains a Major Concern

Pakistan’s existing warehouse infrastructure is considerably smaller than the volume of agricultural commodities produced each year.

The SECP chairman cited approved warehouse capacity of approximately 326,000 metric tonnes, compared with annual production of around 55.7 million metric tonnes of dry agricultural commodities suitable for conventional storage.

This imbalance highlights the need for investment in modern warehouses, temperature-controlled storage and more efficient distribution networks.

Better storage facilities would allow farmers to preserve crop quality for longer periods. They could also help stabilize supplies, reduce seasonal pressure on prices and improve the reliability of agricultural exports.

Encouraging private investment in storage infrastructure could be an important part of addressing this challenge.

Digital Warehouse Receipts Could Open New Financing Opportunities

One of the most important elements of the proposed marketplace is its plan to introduce electronic warehouse receipts.

Under the proposed arrangement, farmers would store their produce in approved warehouses and receive electronic documents confirming the quantity and ownership of their stored commodities. These receipts could then be presented to banks as collateral for loans.

This mechanism could give farmers greater financial flexibility after harvesting. Many producers need immediate cash to repay existing debts, cover household expenses or prepare for the next growing season. As a result, they may have little choice but to sell their crops when market prices are relatively low.

Access to loans against stored produce could reduce this pressure and allow farmers to make selling decisions based on market conditions rather than urgent financial needs.

The system could also help connect agricultural production with formal banking services, although its success would depend on reliable warehouse operations, appropriate lending arrangements and effective protection against fraud.

Wheat, Rice, Maize, Cotton and Sugar in the Initial Phases

The SECP has proposed introducing the digital marketplace in stages, initially focusing on wheat, rice, maize, cotton and sugar.

Standardized grading and quality assessment would help ensure that commodities are evaluated according to consistent requirements. Transparent bidding would allow buyers to compete for available produce, potentially improving price discovery.

Digital records of transactions and commodity inventories could also make it easier to monitor market activity and reduce opportunities for manipulation.

The proposal further calls for the registration of traders and commission agents to improve accountability across the trading process.

However, digital systems will need to be supported by reliable payment arrangements, clear rules for resolving disputes and practical procedures for moving commodities between markets and storage facilities.

Better Price Discovery Could Strengthen Farmers’ Bargaining Power

Farmers often have limited access to information about prevailing prices in different markets. This can weaken their negotiating position, particularly when they depend on intermediaries to sell their produce.

A nationwide digital platform could help address this information gap by making bids and trading activity more transparent.

With access to a broader pool of buyers, farmers could potentially identify more competitive offers and make better-informed selling decisions. Standardized quality assessments could also help buyers distinguish between different grades of produce and pay accordingly.

Nevertheless, better prices would not be guaranteed automatically. The actual benefits would depend on the number of active buyers, the competitiveness of bidding, transportation costs and farmers’ ability to access the platform.

Ensuring that smallholders can participate on fair terms will be essential to achieving the proposal’s intended goals.

Coordination and Infrastructure Will Be Critical

Establishing a national agricultural spot market will require cooperation among provincial governments, financial institutions, warehouse operators, traders and technology providers.

Provincial differences in agricultural market regulations, licensing requirements, fees and commodity transportation procedures could create implementation challenges if they are not addressed effectively.

The country will also need sufficient certified warehouses, dependable quality inspection services and secure electronic recordkeeping systems.

Farmer awareness will be another important consideration. Training and accessible digital services could help rural communities understand how to use the platform, obtain financing and participate in competitive trading.

Without these supporting measures, the marketplace may struggle to deliver its full potential.

SECP Also Targets Broader Financial Market Reforms

In addition to the agricultural initiative, the SECP chairman discussed plans to expand participation in Pakistan’s capital markets.

The regulator aims to increase the stock market investor base to 2.5 million through measures that include financial education campaigns for young people and simpler procedures for opening investment accounts.

The SECP also highlighted the importance of investor protection, dependable financial reporting and stronger supervision of audit firms. An independent legal framework for overseeing audit firms was discussed as a way to improve corporate disclosures and reinforce confidence in the financial system.

These measures form part of a broader effort to encourage financial inclusion and improve transparency across Pakistan’s markets.

Conclusion

The proposed national agricultural spot market offers Pakistan an opportunity to improve agricultural trading through digital technology, better storage and stronger connections with the banking sector.

By enabling farmers to store their crops, access financing and participate in more transparent bidding, the initiative could help reduce post-harvest losses and improve their ability to negotiate competitive prices.

However, achieving these outcomes will require more than a digital platform. Investment in warehouses, effective regulation, reliable payments and inclusive access for small-scale farmers will be equally important.

If implemented successfully, the proposal could contribute to a more efficient agricultural supply chain, stronger rural incomes and a more resilient economy. The key challenge will be ensuring that the planned reforms translate into practical, measurable benefits for farmers throughout Pakistan.

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Pakistan is taking new steps towards modernizing its financial sector by exploring digital bonds, asset tokenization and artificial intelligence (AI)-powered financial services in collaboration with the World Bank Group. The development comes as the country works to establish a regulated environment for virtual assets and attract both domestic and international businesses.

According to the Pakistan Virtual Assets Regulatory Authority (PVARA), around 75 local and foreign companies have submitted applications to obtain licenses to operate in Pakistan’s virtual asset market. This growing interest reflects the potential for digital finance to become an important part of the country’s economic and technological development.

Pakistan and the World Bank Discuss Financial Innovation

Bilal bin Saqib, Minister of State and Chairman of PVARA, recently held discussions with Jorge Familiar, Vice President and Treasurer of the World Bank Group, during the IMF-World Bank Annual Meetings in Bangkok.

The meeting focused on possible cooperation in digital financial products, including tokenized assets, digital bonds and AI-based financial operations. Both sides also discussed sharing technical expertise, strengthening institutional capabilities and using modern financial technologies to improve Pakistan’s capital markets.

The proposed collaboration could help Pakistan explore more efficient financial systems, improve access to investment opportunities and strengthen investor protection. Better settlement mechanisms and stronger regulatory safeguards were also among the key areas of interest.

From Restrictions to a Regulated Virtual Asset Market

Pakistan’s approach to virtual assets has been evolving as policymakers seek to move away from restrictions towards a formal regulatory structure.

Bilal bin Saqib stated that significant progress had been made within approximately 15 months. He highlighted the introduction of the Virtual Assets Act 2026, changes to the banking restrictions previously imposed by the State Bank of Pakistan in 2018, and the development of licensing rules.

According to his statement on social media, PVARA has received 75 applications from companies interested in entering the country’s virtual asset industry. These applications include both Pakistani businesses and international firms looking to explore opportunities in the emerging market.

However, receiving applications does not mean that all applicants will receive approval. Licensing and regulatory assessments will remain important steps in determining which companies can legally operate in the sector.

What Is Asset Tokenization, and Why Does It Matter?

Asset tokenization involves representing ownership rights in an asset through digital tokens recorded on a blockchain or another digital ledger. Depending on the legal and technological structure, these tokens may represent interests in assets such as property, gold or financial instruments.

For Pakistan, tokenization could offer new ways to make certain investments more accessible and improve the transfer and settlement of financial assets.

For example, a properly structured property-tokenization project could allow investors to purchase fractional interests in a property rather than having to finance the entire asset themselves. Similarly, digital bonds could potentially simplify the issuance, transfer and administration of certain debt instruments.

Nevertheless, these benefits would depend on clear ownership rights, enforceable contracts, reliable technology and effective investor safeguards. Tokenization does not automatically make an investment safe, liquid or profitable.

Regulatory Sandbox to Test New Financial Products

PVARA has also introduced a regulatory sandbox covering areas such as gold, real estate and remittances. A regulatory sandbox provides a controlled environment in which eligible businesses can test innovative products under regulatory supervision.

This approach may help authorities understand how emerging technologies perform in real-world conditions before considering wider adoption.

For Pakistan, possible applications include digital representations of gold holdings, technology-enabled property investments and improved cross-border remittance services. If implemented effectively, such solutions could help businesses test new models while allowing regulators to identify operational, legal and financial risks at an early stage.

Could AI Transform Pakistan’s Financial Services?

Artificial intelligence is another area being explored as Pakistan looks to strengthen its financial infrastructure. AI-powered tools can potentially support transaction monitoring, fraud detection, compliance checks, customer service and financial risk analysis.

Combining these technologies with a well-regulated digital asset market could help financial institutions improve operational efficiency. However, successful adoption would require strong cybersecurity, responsible data management, transparent decision-making and adequate oversight.

What Does This Mean for Pakistan’s Economy?

The growing interest from virtual asset companies presents a potential opportunity for Pakistan to attract investment, encourage financial innovation and develop new technology-driven businesses.

A well-regulated market could create opportunities for fintech companies, software developers, financial institutions and businesses involved in digital asset services. It could also support the development of new investment products and potentially improve access to capital for businesses.

PVARA has indicated that licensing will be a key priority, while the economic benefits of the sector are expected to become more visible in 2027. These outcomes, however, will depend on the pace of implementation, the quality of regulation, investor confidence and actual market adoption.

The authorities will also need to address risks such as fraud, money laundering, cyberattacks, market manipulation and misleading investment schemes. A strong regulatory framework will be essential to ensure that innovation does not come at the expense of financial stability or consumer protection.

Conclusion

Pakistan’s discussions with the World Bank Group signal a growing interest in digital financial innovation, including asset tokenization, digital bonds and AI-enabled financial operations. At the same time, the 75 reported licensing applications suggest that domestic and international businesses are exploring the country’s virtual asset market.

The next major challenge will be turning these developments into a transparent, secure and commercially sustainable financial ecosystem. With effective regulation, institutional cooperation and responsible adoption of technology, Pakistan could create new opportunities for investment and modernize parts of its financial sector.

While the long-term economic impact remains to be seen, the country’s evolving regulatory approach could mark an important step towards a more digitally enabled financial future.

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Pakistan may attract fresh Chinese investment as Shengtang Group has expressed interest in signing a $10 million memorandum of understanding (MoU) to explore business opportunities in seven important sectors of the country. The proposed investment could support industrial growth, infrastructure development, energy projects, and other areas linked to Pakistan’s economic progress.

According to a statement from Pakistan’s Ministry of Industries and Production, representatives of the Chinese company discussed potential investment opportunities during a meeting with Haroon Akhtar Khan, Adviser to the Prime Minister on Industries and Production.

Seven Sectors Under Consideration

Shengtang Group has shown interest in exploring opportunities across a range of industries that could contribute to Pakistan’s economic development. The sectors under consideration include:

• Industrial development: Expanding industrial activities and supporting local manufacturing.
• Infrastructure: Exploring projects that could improve facilities and support economic connectivity.
• Tourism: Identifying opportunities to develop tourism-related businesses and services.
• Electric vehicles (EVs): Exploring investment in the growing electric mobility sector.
• Railways: Considering opportunities to support railway development and transportation infrastructure.
• Energy: Looking into projects that could contribute to the country’s energy sector.
• Urban development: Exploring initiatives related to urban infrastructure and city development.

Investment across these sectors could create opportunities for collaboration between Pakistani businesses and Chinese investors. However, the projects, funding arrangements, and implementation timelines have yet to be confirmed.

Pakistan Highlights Reforms to Attract Chinese Investors

During the meeting, Haroon Akhtar Khan highlighted the government’s efforts to improve the business environment and make investment procedures more convenient for foreign companies.

He said the government was introducing business-friendly regulatory changes and had issued instructions to relevant authorities to facilitate Chinese investors. The measures are intended to improve the ease of doing business and encourage greater participation from international companies.

The adviser also discussed the land-lease model, which offers a potential mechanism for investors seeking land for industrial and commercial development. Such arrangements could help businesses explore opportunities without necessarily purchasing land outright, depending on the applicable terms and conditions.

Stronger Economic Cooperation Between Pakistan and China

Pakistan and China have maintained close economic ties, with cooperation extending across infrastructure, industrial development, energy, and other areas. The proposed interest from Shengtang Group represents another potential opportunity to expand commercial engagement between the two countries.

Khan emphasized the government’s intention to translate Prime Minister Shehbaz Sharif’s vision for stronger relations with China into practical economic outcomes.

He also stated that around 40% of joint ventures and memorandums of understanding signed between Pakistan and China had moved into the implementation stage. This figure was cited by the adviser during the meeting and points to the government’s stated focus on advancing bilateral initiatives beyond the agreement stage.

Potential Benefits for Pakistan’s Economy

If the proposed investment progresses into concrete projects, it could offer several potential benefits for Pakistan.

Employment opportunities: Industrial and infrastructure projects may generate jobs during construction, operations, and supporting business activities.

Technology transfer: Cooperation with Chinese companies could create opportunities for Pakistani businesses to gain access to new technologies, technical expertise, and industrial processes.

Industrial expansion: New investment could help strengthen manufacturing capacity, encourage local production, and support related supply chains.

Development of emerging industries: Interest in electric vehicles could open further opportunities in vehicle assembly, charging infrastructure, and associated services, depending on the projects eventually pursued.

Greater foreign investment: Progress on the proposed MoU could encourage other international investors to examine opportunities in Pakistan.

These outcomes will depend on the scale of the projects, the financing arrangements, regulatory approvals, and the extent to which the proposed initiatives move forward.

What Happens Next?

Although Shengtang Group has expressed interest in a $10 million MoU, the proposal should not yet be treated as a completed investment. Further details about the agreement, the allocation of funds across the seven sectors, and the schedule for implementation would be needed to assess its likely economic impact.

The next important step will be to determine whether the parties formalize the proposed agreement and develop specific projects from the discussions.

For Pakistan, converting investment interest into operational businesses and completed projects remains essential to achieving lasting economic benefits. Effective implementation, a predictable regulatory environment, and coordination between investors and government institutions will be important factors in this process.

Conclusion

Shengtang Group’s interest in a proposed $10 million MoU signals a potential new avenue for economic cooperation between Pakistan and China. With opportunities spanning industry, infrastructure, tourism, electric vehicles, railways, energy, and urban development, the discussions cover several areas relevant to Pakistan’s development priorities.

While the proposal is still at the expression-of-interest stage, successful negotiations and project implementation could create opportunities for employment, technology transfer, industrial growth, and stronger commercial ties. The actual benefits will become clearer as further details emerge and the proposed investment moves, if it does, toward implementation.

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Pakistan is aiming for economic growth of more than 4% in the current fiscal year as the government steps up efforts to attract private investment, sell state-owned entities and strengthen the country’s financial position. Finance Minister Muhammad Aurangzeb has also confirmed that discussions with the United States are continuing over a proposed $10 billion exchange stabilization facility.

The government’s plans come at a time when Pakistan faces economic challenges linked to rising international oil prices, regional tensions and its dependence on external financing. Despite these pressures, the finance minister remains optimistic about the country’s economic outlook.

Pakistan Remains Optimistic About Economic Growth

According to Aurangzeb, Pakistan’s economy is expected to expand by more than 4% during the current fiscal year. He pointed to the performance of key sectors, particularly agriculture, and the country’s ability to maintain sufficient fuel supplies despite uncertainty in international energy markets.

However, higher oil prices remain a concern because Pakistan relies heavily on imported energy. An extended conflict in the Middle East could increase import costs, push inflation higher and create additional pressure on the country’s foreign exchange reserves.

The government is therefore keeping a close watch on commodity prices and their potential impact on the wider economy.

Government Plans to Raise More Than $1 Billion Through Privatization

Privatization is expected to play an important role in Pakistan’s economic reform strategy. The finance minister said the government intends to complete the privatization of five or six entities during the current fiscal year, potentially generating more than $1 billion.

Around a dozen entities are reportedly in the pipeline, including state-owned electricity distribution companies and plans to outsource airport operations.

The initiative follows the privatization of Pakistan International Airlines, which marked a significant step in the government’s efforts to reduce the state’s involvement in commercial activities.

The government believes that greater private-sector participation could improve operational efficiency, attract investment and reduce the financial burden associated with underperforming public enterprises.

Privatization is also an important part of Pakistan’s commitments under its International Monetary Fund (IMF) programmed. Progress on these reforms will be closely watched by international lenders and investors.

Pakistan Continues Talks With the United States

Alongside its privatization plans, Pakistan is pursuing additional financial support through negotiations with the United States over a proposed $10 billion exchange stabilization facility.

Aurangzeb said discussions were ongoing but did not provide a timeline for a possible agreement. He also indicated that the proposed arrangement would complement other engagements with US financial institutions, including the Export-Import Bank of the United States and the US International Development Finance Corporation.

If finalized, the facility could provide another potential source of financial support for Pakistan. However, the proposal remains under discussion and should not be considered secured funding.

The finance minister also stressed that Pakistan would continue to seek access to international markets even if the proposed facility does not materialize.

IMF Support Remains Important for Economic Stability

Pakistan’s economic recovery has been supported by a $7 billion IMF programmed approved in 2024. The programmed includes economic reforms aimed at improving tax collection, strengthening public finances and addressing structural weaknesses.

More recently, Pakistan reached a staff-level agreement with the IMF that could unlock approximately $1.21 billion in additional financing under its existing programmed and a climate-related funding arrangement, subject to the required approvals.

Continued IMF support is significant for Pakistan because the country needs foreign currency to meet external debt obligations, maintain adequate reserves and manage its balance of payments.

At the same time, the reforms associated with international lending can create difficulties for businesses and households, particularly when higher taxes and rising prices affect purchasing power.

Inflation and Oil Prices Remain Key Concerns

While the government expects economic growth to exceed 4%, inflation remains a major risk. Pakistan’s reliance on imported energy means that increases in global oil prices can raise transportation expenses, production costs and the cost of delivering goods to consumers.

These pressures could affect household budgets and businesses across several sectors.

The government will need to balance its growth ambitions with measures that maintain price stability and protect economic recovery. Stronger agricultural output and reliable fuel availability could help, but the broader outlook will also depend on international market conditions.

Private Investment Could Shape Pakistan’s Economic Future

The government’s push to privatize public-sector enterprises reflects its intention to give private businesses a greater role in economic activity.

Successful transactions could generate revenue, reduce financial risks for the government and encourage investment in sectors that require operational improvements. However, the final impact will depend on whether the planned transactions are completed successfully and whether new owners can improve efficiency and service delivery.

Investors will also be watching Pakistan’s progress on economic reforms, fiscal management and external financing.

Conclusion

Pakistan is entering the current fiscal year with a growth target above 4%, plans to generate more than $1 billion through privatization and ongoing discussions over a proposed $10 billion financial facility with the United States.

These initiatives highlight the government’s efforts to strengthen economic stability and attract greater private-sector participation. Nevertheless, high energy costs, inflation risks and dependence on external financing remain significant challenges.

The country’s economic performance will ultimately depend on its ability to implement reforms, maintain financial stability and translate announced targets into measurable results. Progress on privatization, continued engagement with international lenders and effective management of inflation will be important factors in determining whether Pakistan can sustain its recovery.

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The possibility of aircraft leasing, engine arrangements and export credit assistance was discussed as Pakistan and Britain looked for ways to address PIA’s immediate fleet requirements while keeping longer-term procurement plans in view.

The issue was raised during a meeting between Federal Minister for Commerce Jam Kamal Khan and British High Commissioner Jane Marriott at the Ministry of Commerce.

Airbus and Rolls-Royce in Focus

Aviation cooperation was among the most important subjects discussed during the meeting. British representatives shared details about engagement with Airbus and Rolls-Royce and outlined potential options that could help PIA improve its fleet.

Export credit support was also considered as a possible mechanism for facilitating aircraft-related transactions.

For PIA, leasing could provide a faster way to add aircraft to its fleet without having to wait for lengthy procurement processes. This approach could help the airline meet its immediate operational needs while it develops a broader and more sustainable fleet strategy.

The commerce minister stressed that PIA’s direct international routes provide the airline with a significant commercial advantage. However, he also emphasized that the carrier needs better reliability, modern aircraft and improved service quality to regain the confidence of passengers.

UK and Pakistan Seek Wider Economic Cooperation

The discussions were not limited to the aviation industry. Pakistan and the UK also examined ways to increase bilateral trade and attract investment in several sectors.

Healthcare, life sciences, IT, agriculture, livestock, financial services and minerals-related businesses were among the areas identified for greater cooperation.

Both countries are also looking to achieve tangible results through the next bilateral Trade Dialogue rather than limiting cooperation to policy discussions.

Britain proposed the possibility of developing a long-term investment partnership that would be non-legally binding but supported at the ministerial level. The proposed framework could cover areas such as investment, regulatory improvements, trade facilitation, workforce development and investment financing.

Livestock Sector Could Attract British Investment

Pakistan’s livestock industry was identified as an area with considerable potential for cooperation.

Jam Kamal Khan highlighted the government’s interest in increasing animal productivity, improving production methods and expanding processed and value-added meat exports.

British technology, technical expertise and investment could help Pakistan modernize its livestock industry and establish stronger links with international markets.

The British High Commissioner pointed out that improvements in food safety and regulatory compliance would also be essential. Meeting international standards would allow Pakistani livestock and food producers to access the UK and other overseas markets more effectively.

Focus on Building Pakistani Brands

Another important topic was the international marketing of Pakistani products.

The commerce minister called for greater efforts to build internationally recognized Pakistani brands instead of relying primarily on foreign companies to market locally produced goods.

Products such as pink salt, olive oil, textiles, food items and surgical instruments were identified as areas where Pakistan could potentially generate greater value through branding, quality improvement and product development.

The discussions also covered opportunities for Pakistani food companies and restaurant businesses to establish a stronger presence across the UK.

Opportunities in Islamic Finance

Pakistan and Britain also discussed financial-sector cooperation, particularly in the field of Islamic finance.

Greater collaboration could help develop stronger financial connections between Pakistan and the Pakistani community living in the United Kingdom.

Such links could support investment, business expansion and the movement of capital between the two markets.

UK Expertise Could Support Pakistan’s Minerals Industry

The minerals sector was another key area of interest.

Pakistan is seeking international technical expertise and experienced partners to improve mineral exploration and develop commercially viable projects. Joint ventures and professional services could play an important role in strengthening the country’s domestic mining capabilities.

British companies could contribute expertise in areas such as legal services, finance, insurance and other supporting fields.

The UK also showed interest in encouraging its businesses to participate in Pakistan’s upcoming minerals conference.

2027 Could Bring New Business Opportunities

The two countries also discussed plans surrounding Pakistan’s 80th anniversary in 2027.

The anniversary could be used to organize business, educational and cultural activities designed to showcase Pakistani products and highlight investment opportunities.

Such initiatives could provide Pakistani businesses with additional exposure in the UK while strengthening people-to-people and commercial ties between the two countries.

A Broader Partnership Taking Shape

The latest talks demonstrate that Pakistan-UK economic relations are expanding beyond traditional trade areas. Aviation, particularly the possible involvement of Airbus and Rolls-Royce in PIA’s fleet requirements, could become an important component of this relationship.

For PIA, leasing and potential financial support could provide a route toward addressing immediate fleet shortages. For Pakistan more broadly, cooperation with the UK could open new opportunities in technology, agriculture, healthcare, financial services and minerals.

The next challenge will be turning these discussions into specific agreements, investments and commercial projects. Both sides have indicated their intention to continue working together and prepare practical proposals for the next Trade Dialogue.

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The facility is particularly relevant to steel melters, re-rollers and composite units, which are required to declare electricity consumption through Annex-K of their sales tax returns.

New solution for delayed electricity data

Under the existing sales tax framework, electricity consumption data for steel units is generally transferred automatically to Annex-K after the relevant electricity distribution company submits its Annex-C information.

However, delays or omissions by distribution companies can create problems for steel manufacturers. Without the required electricity consumption figures, taxpayers may face difficulties in completing Annex-K and determining their correct sales tax liability.

To address this issue, the FBR has developed an online approval facility that allows taxpayers to seek inclusion of their electricity units when the normal automated process has not provided the data.

How the new mechanism works

Steel manufacturers facing this issue can submit an application through the IRIS system to their respective Chief Commissioner of Inland Revenue.

The application must be supported by the relevant electricity bills and other required information. The Chief Commissioner will review and verify the documents before approving the electricity consumption figures.

Once the application is approved, the authorized electricity units will be entered into the system and will subsequently appear automatically in the taxpayer’s Annex-K.

Importance of Annex-K for steel manufacturers

The filing of Annex-K is a mandatory requirement for steel melters, re-rollers and composite units under the 13th Schedule of the Sales Tax Act, 1990.

Electricity consumption is an important component in determining the sales tax liability of these businesses. Consequently, missing or delayed electricity data can potentially disrupt the return-filing process.

The new facility is therefore intended to prevent taxpayers from being penalized or delayed because of reporting issues attributable to electricity distribution companies.

Taxpayers can avoid waiting for DISCO returns

Previously, a steel manufacturer could be left waiting for the relevant distribution company to submit its return before the electricity consumption data became available in Annex-K.

With the new arrangement, taxpayers have a formal route to request the required electricity units directly through the tax authority’s online system.

This should make the sales tax filing process more efficient and allow eligible steel manufacturers to complete their returns within the prescribed deadlines.

FBR directs field offices to process applications

The FBR has instructed Chief Commissioners of Inland Revenue to deal with these applications within the applicable statutory time limits. It has also directed its field formations to make use of the newly introduced online facility.

The measure effectively places greater responsibility on tax offices to verify genuine electricity consumption claims where the automated data-sharing mechanism between taxpayers and distribution companies does not work as intended.

What steel manufacturers should do

Eligible taxpayers whose electricity consumption is missing from Annex-K should:

1. Check their electricity bills and consumption records.
2. Confirm that the relevant units have not been reported through the normal automated process.
3. Submit the required application through IRIS within the applicable statutory period.
4. Provide the necessary electricity bills and supporting information.
5. Obtain approval from the concerned Chief Commissioner.
6. Verify that the approved consumption figures appear in Annex-K before completing the sales tax return.

Conclusion

The FBR’s new online facility is aimed at resolving a practical problem faced by steel manufacturers when electricity distribution companies fail to report consumption data or submit their returns late.

By allowing verified electricity consumption to be approved through the IRIS system, the FBR has provided steel melters, re-rollers and composite units with a mechanism to complete their Annex-K requirements without unnecessarily waiting for delayed DISCO reporting.

The initiative is expected to make sales tax compliance smoother for the steel sector while ensuring that electricity consumption used for calculating tax liability is supported by verified documentation.

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According to data shared by Topline Securities, Pakistan’s IT exports reached $394 million in August 2026, marking a 17% increase compared with August last year. The latest figure takes the country’s total IT exports for the first two months of FY2026-27 to approximately $811 million.

The August figure, however, was lower than the previous month. IT exports stood at $417 million in July, meaning August experienced a month-on-month decline of around 6%. Analysts attributed much of this reduction to the lower number of working days during August.

Strong Growth Over the Past Year

While the monthly decline may appear significant, the longer-term trend remains positive. Pakistan’s IT exports over the latest 12-month period reached approximately $4.7 billion, compared with $3.9 billion during the corresponding period a year earlier.

This represents growth of roughly 21% year-on-year, highlighting the continued expansion of Pakistan’s technology and digital services sector.

Net IT exports also showed improvement. After accounting for imports, net IT exports amounted to around $336 million in August, representing a 10% increase from the same month last year.

Monthly Performance Shows Continued Expansion

Pakistan’s IT export figures have fluctuated from month to month, but the overall direction has remained upward.

Exports were recorded at $337 million in August 2025 and increased to $366 million in September and $386 million in October. After falling to $356 million in November, exports jumped to $437 million in December.

The sector continued to post strong figures during 2026. Exports reached $374 million in January and $365 million in February, before rising above $400 million in March and April. March recorded $413 million, while April reached $423 million.

Following a decline to $373 million in May, exports recovered to $416 million in June and $417 million in July. August then recorded $394 million.

The repeated monthly readings above the $400 million mark demonstrate the growing scale of Pakistan’s IT services industry.

Government Sets Ambitious $10 Billion Goal

The latest export numbers come as the government seeks to significantly expand Pakistan’s technology economy.

Under the Uraan Pakistan national economic plan, the government has established a target of taking annual IT exports to $10 billion by FY2029.

Topline Securities estimates that reaching this goal would require IT exports to grow at a compound annual growth rate of approximately 28.4% through FY2029.

That target represents a substantial acceleration from the sector’s recent growth rate. Pakistan has already made progress toward expanding its technology exports, but maintaining faster growth will require continued investment in digital infrastructure, skilled professionals, technology businesses and international market access.

The Road Ahead for Pakistan’s Technology Sector

The latest export figures underline the increasing importance of IT and digital services to Pakistan’s external earnings.

The sector’s ability to generate billions of dollars in export revenue provides an opportunity to diversify the country’s export base beyond traditional industries. Continued growth could also create greater opportunities for software companies, freelancers, startups and other technology-focused businesses.

For now, August’s 17% year-on-year increase and the $4.7 billion trailing 12-month figure indicate that Pakistan’s IT export sector remains on a strong growth trajectory.

The bigger challenge will be sustaining that momentum over the coming years and closing the gap between the current export level and the government’s $10 billion FY2029 ambition.

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The IMF review will cover Pakistan’s progress under the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF). A successful review would strengthen confidence in Pakistan’s economic reforms and reduce the risk of delays in future programmed support.

Fiscal Challenges Remain

Despite progress on IMF targets, Pakistan faces growing fiscal pressure in FY27. AHL expects the fiscal deficit to increase to 3.9% of GDP, compared with 2.6% in FY26.

Interest payments are expected to rise sharply to around Rs8.5 trillion, up 22% from the previous year. Higher borrowing costs and increased government spending could make fiscal management more difficult.

Tax collection is another concern. The Federal Board of Revenue missed its FY26 target by around Rs1.1 trillion, raising questions about whether revenue targets for FY27 can be achieved.

Inflation and External Pressures

Inflation is projected to average 8.22% in FY27, with the annual rate potentially reaching nearly 9.5% early in the year before easing later.

Pakistan’s current-account deficit is also expected to widen to 0.78% of GDP, mainly because imports are projected to grow faster than exports. However, record workers’ remittances remain an important source of support, reaching $41.6 billion in FY26.

Oil prices will be particularly important. Higher global energy prices could increase inflation and put additional pressure on Pakistan’s external account.

Growth and Investor Confidence

AHL forecasts Pakistan’s GDP growth at 3.84% in FY27, slightly above the 3.70% recorded in FY26. Growth is expected to be led by industry, while agriculture could face challenges from weaker-than-targeted wheat production.

Pakistan has also received a boost from international rating agencies. S&P and Moody’s recently upgraded the country’s credit ratings, while Fitch maintained its existing rating. The successful launch of Pakistan’s first Panda Bond also signals improving access to international capital markets.

The Road Ahead

The September IMF review is likely to focus more on Pakistan’s consistency in implementing reforms than on introducing new commitments. While the country appears well placed to clear the review, FY27 will be a tougher test.

Pakistan now needs to control inflation, improve tax collection, manage rising interest costs and protect its external reserves while maintaining economic growth.

The immediate IMF outlook is encouraging, but the real challenge will be turning recent economic stability into sustainable long-term growth.

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The latest figures represent a 43.13% increase from June, when textile exports stood at $1.27 billion. Compared with July 2025, exports were also higher by 8.07%, highlighting continued growth in the country’s largest export-oriented sector.

In rupee terms, textile exports amounted to approximately Rs504.34 billion during the month.

Garments and Knitwear Remain Major Export Drivers

Knitwear continued to account for the largest share of Pakistan’s textile exports. Exports of knitwear climbed 46.60% month-on-month to $533.84 million, while recording a more modest 4.06% year-on-year increase.

Readymade garments also delivered a strong performance. Their export value rose 45.87% from the previous month to $459.99 million and was 15% higher than a year earlier. The double-digit annual increase makes garments one of the stronger-performing segments of the textile sector.

Bedwear exports followed a similar trend, reaching $308.50 million, up 47.13% compared with June and 4.16% year-on-year.

Towels and Made-Up Articles Show Strong Momentum

Among the major textile categories, towels recorded the most significant monthly growth. Exports increased 60.35% month-on-month to $106.36 million and were 13.37% higher than in July 2025.

Made-up articles, excluding towels and bedwear, also posted substantial gains. Exports rose 58.51% from June to $77.21 million, representing a 10.56% annual increase.

Meanwhile, cotton cloth exports grew 26.27% month-on-month to $141.59 million. However, they remained almost unchanged on an annual basis, declining slightly by 0.10%.

Cotton yarn exports showed more moderate monthly growth, increasing 3.91% to $66.53 million. On a year-on-year basis, however, cotton yarn exports were up a healthy 18.69%.

Textile Imports Also Increase

The improvement in exports was accompanied by higher textile imports. Pakistan imported $682.21 million worth of textile products in July, compared with $647.43 million in June.

This represents a 5.37% monthly increase and a 14.82% year-on-year rise. In rupee terms, textile imports stood at approximately Rs189.93 billion.

Raw cotton remained one of the largest import categories at $186.34 million. Although raw cotton imports declined 15.37% from June, they were 30.01% higher than a year earlier.

Imports of synthetic and artificial silk yarn recorded particularly strong monthly growth, rising 43% to $125.84 million. They were also 18.42% higher year-on-year.

Worn clothing imports increased to $62.36 million, up 6.30% from June and an impressive 41.44% compared with July 2025.

Synthetic fiber imports reached $72.42 million, representing a 4.34% monthly increase. However, they were 4.02% lower on an annual basis.

A Positive Start for Pakistan’s Textile Sector

July’s figures provide an encouraging start for Pakistan’s textile industry. The strongest growth came from value-added products such as garments, knitwear, towels and made-up articles, rather than being driven solely by raw or semi-processed textile products.

The 8.07% annual increase in total textile exports is particularly important because it indicates that the sector is performing better than it did at the same time last year. Stronger garment and towel exports could also help support foreign-exchange earnings and industrial activity.

However, rising textile imports show that manufacturers are also increasing their purchases of cotton, yarn and other inputs. Whether this translates into sustained export growth will depend on international demand, production costs, energy prices, exchange-rate conditions and the competitiveness of Pakistani manufacturers.

For now, July’s $1.81 billion export figure signals renewed momentum for one of Pakistan’s most important economic sectors. If the pace of demand for value-added textile products continues, the industry could play an even greater role in boosting the country’s exports during the months ahead.

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The reform agenda was discussed during a high-level meeting chaired by Federal Minister for Economic Affairs and Establishment Division Ahad Cheema. Government officials, representatives of the Public Procurement Regulatory Authority (PPRA), and members of the Construction Association of Pakistan (CAP) participated in the discussions.

A New Body for the Construction Sector

The proposed CIDB is expected to play both a developmental and regulatory role. Rather than focusing solely on oversight, the board would work with government and industry stakeholders to promote growth, introduce better standards, and encourage modern construction practices.

According to the proposal, the board would include representatives from both the public and private sectors. This structure could provide the industry with a central platform for addressing regulatory problems while improving the quality and efficiency of construction projects across Pakistan.

The government and CAP have reportedly reached a broad understanding on the need for such an institution, with the proposed framework expected to be presented to the prime minister for approval.

Longer Liability Period for Public Projects

One of the most important proposed changes concerns the Defect Liability Period (DLP) for government-funded construction projects.

Currently, the standard liability period is generally one year. The government is considering extending it to three years, with a possible future increase to five years.

The purpose is straightforward: contractors should remain responsible for the quality of their work for a meaningful period after a project is completed. A longer liability period could discourage shortcuts and poor-quality construction because contractors would remain exposed to the cost of repairing defects that emerge after completion.

For taxpayers, the measure could also help reduce the recurring problem of infrastructure requiring repairs soon after being handed over.

Consultants Could Face Greater Accountability

The proposed reforms also address an area that has received comparatively less attention in the past: the responsibility of consultants.

Under the existing framework, contractors can be penalized for failing to meet contractual requirements or delivering substandard work. However, consultants involved in project design and technical supervision may not face the same level of direct accountability.

The proposed CIDB framework could change that by bringing consultants under stronger regulatory supervision. They could potentially face legal and financial consequences when poor designs, technical errors, or professional negligence contribute to project failures.

CAP has supported the idea, arguing that greater accountability among consultants would help protect public funds and improve the accuracy of project designs.

Dedicated Bank for Construction Companies

Financing is another major concern for Pakistan’s construction sector. Industry representatives have highlighted difficulties in obtaining bank guarantees and performance guarantees, which can create obstacles for contractors bidding for and executing major projects.

In response, the government is exploring the creation of a Construction Development Bank specifically designed to meet the industry’s financial needs.

Federal authorities have asked the relevant finance officials to engage with the State Bank of Pakistan and the Pakistan Banks Association to assess whether such an institution would be practical and financially viable.

The proposal is still under consideration, meaning the creation of the bank will depend on the outcome of these consultations and a detailed feasibility assessment.

Tax and Trade Measures Also Under Consideration

The reform package goes beyond institutional changes. Authorities are also examining targeted tax measures and adjustments to import and export policies.

These changes are intended to reduce some of the financial and regulatory pressures affecting construction companies. Better access to modern machinery, technology, and imported materials could help domestic firms improve productivity and compete more effectively.

At the same time, carefully designed tax incentives could encourage investment and support the industry’s expansion.

Potential Impact on Pakistan’s Construction Industry

Pakistan’s construction sector plays an important role in employment, infrastructure development, housing, and economic activity. However, the industry has long faced challenges including inconsistent standards, financing constraints, regulatory complexity, and concerns over project quality.

The proposed reforms could address several of these issues simultaneously.

A strong CIDB could provide a dedicated institution for developing industry standards and resolving regulatory problems. Longer defect liability periods could improve construction quality, while consultant accountability could strengthen professional responsibility. Meanwhile, a specialized financial institution could potentially make it easier for construction firms to obtain the guarantees and financing required for major projects.

However, the success of the reforms will ultimately depend on how they are implemented. A new regulatory body will need clear powers, transparent procedures, and effective coordination with existing institutions. Similarly, any specialised construction bank would need a sustainable financial model and strong governance.

A Potential Turning Point

Pakistan’s proposed construction-sector reforms represent an attempt to move beyond individual project regulations and create a more organized framework for the industry.

If approved and implemented effectively, the CIDB could become a central institution for improving construction standards, encouraging innovation, and holding both contractors and consultants accountable. The proposed Construction Development Bank, meanwhile, could help address one of the industry’s most persistent challenges: access to suitable financial support.

The combination of stronger regulation, longer liability periods, professional accountability, financing reforms, and targeted tax and trade measures could significantly reshape Pakistan’s construction landscape.

The proposals are still moving through the approval and consultation process, but they signal the government’s intention to make the construction sector more accountable, competitive, technologically capable, and aligned with international standards.

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The company plans to make 58,049,541 shares available to investors, representing 15% of its paid-up capital following the IPO. The shares will be offered through the book-building process before being listed on the Pakistan Stock Exchange (PSX).

The move will allow the company to raise fresh capital while giving investors an opportunity to become shareholders in a business operating in Pakistan’s food and industrial products sector.

Institutional Investors to Get Larger Allocation

The IPO has been structured to give institutional investors and high-net-worth individuals the majority of the offered shares.

Around 75% of the issue will be allocated to institutional and high-net-worth investors, while 25% will be set aside for individual or retail investors.

Using the book-building system, investor demand will help determine the final price at which the shares are offered.

Expanding Production Capacity

Agro Processors & Atmospheric Gases is involved in the production and marketing of a variety of food and industrial products. Its portfolio includes edible oils, vanaspati, margarine, industrial fats, spices and sauces.

A substantial share of the funds generated through the IPO will be used to expand the company’s manufacturing capabilities.

The company intends to dedicate roughly 40% of the IPO proceeds to increasing its refining capacity by about 33%. Once the planned expansion is completed, annual refining capacity is expected to reach 120,000 tons.

The additional capacity could allow the company to respond to increasing market demand and strengthen its position within the edible-oil and related industries.

Storage Infrastructure Also on the Agenda

Part of the capital raised will be used to develop a new storage facility. Additional storage can play an important role for a company operating in commodity-related industries by improving inventory management and supporting larger production volumes.

The investment could also help the company streamline its supply chain as its production capacity expands.

Turning to Renewable Energy

Another notable feature of the company’s expansion strategy is its focus on energy efficiency.

Agro Processors plans to invest in biomass and solar energy businesses as part of an effort to reduce energy expenses. For a manufacturing company, lowering electricity and fuel costs can have a direct impact on production expenses and profitability.

The shift toward alternative energy could therefore support the company’s long-term cost-control strategy while reducing its reliance on conventional energy sources.

What Investors Should Watch

The IPO could attract interest from investors looking for exposure to Pakistan’s consumer and manufacturing sectors. However, the success of the offering will ultimately depend on factors such as the valuation, company earnings, market conditions and its ability to deliver on the expansion plans.

Increasing refining capacity, building storage infrastructure and investing in alternative energy all require effective execution and careful financial management.

A Potentially Significant Market Debut

The SECP’s approval marks an important step toward Agro Processors & Atmospheric Gases becoming a publicly traded company.

By offering 15% of its post-IPO capital to investors, the company is opening its ownership to the wider market while raising funds for expansion. Its plans to increase refining capacity to 120,000 tons annually and invest in storage and renewable energy could provide a foundation for future growth.

The upcoming PSX listing will therefore be worth watching as the company seeks to turn fresh market capital into greater production capacity, improved efficiency and long-term expansion.

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According to official figures, 317,436 workers travelled abroad for employment between January and June. The departures included both skilled professionals and technical workers, ranging from doctors and engineers to IT specialists, technicians and healthcare personnel.

Gulf Countries Remain the Main Choice

Saudi Arabia remained by far the most attractive destination for Pakistani workers. Nearly 184,000 workers moved to the Kingdom during the first half of the year.

The United Arab Emirates ranked second, with more than 50,000 Pakistani workers travelling there. Qatar received around 34,000, while Bahrain attracted over 13,000. Türkiye also appeared among the notable destinations, with thousands of Pakistanis securing employment there.

Several other countries, including the United Kingdom, Greece, Cyprus and Malaysia, also provided employment opportunities for Pakistani workers.

The figures reinforce the Gulf region’s long-standing role as a major destination for Pakistan’s overseas workforce.

Skilled Workers Are Increasingly Leaving

One of the most significant aspects of the current migration trend is the diversity of workers seeking opportunities abroad.

The departing workforce includes doctors, software engineers, IT professionals, petroleum and mechanical engineers, paramedical employees and technical specialists. This suggests that the movement is not simply a search for manual labor jobs but also reflects dissatisfaction among highly educated and professionally qualified Pakistanis.

Limited opportunities for career progression and concerns about the country’s economic direction are encouraging many skilled individuals to consider building their careers elsewhere.

Economic Uncertainty Drives the Trend

Several domestic challenges are contributing to the growing demand for overseas employment. Inflation, unemployment and economic uncertainty have made it increasingly difficult for many people to achieve financial stability.

Political uncertainty and repeated internet disruptions have also created difficulties for businesses and professionals, particularly those working in technology and digital industries.

Pakistan’s limited technological infrastructure and shortage of research and development facilities are additional concerns. For highly skilled workers, foreign countries can offer better access to advanced technology, research opportunities, competitive salaries and professional development.

A Potential Benefit Through Remittances

The departure of hundreds of thousands of workers also has an important economic dimension. Pakistan receives substantial remittances from citizens employed overseas, and a larger international workforce could potentially increase the money flowing back into the country.

These funds support millions of families and provide an important source of foreign exchange for Pakistan. Overseas workers therefore play a significant role in supporting household incomes and the wider economy.

However, the benefits of migration need to be balanced against its long-term consequences.

The Risk of Losing Skilled Talent

When doctors, engineers, IT experts and other professionals leave Pakistan, the country loses part of its skilled workforce. If the trend continues, sectors already facing shortages could experience further pressure.

The challenge for Pakistan is therefore not simply to manage overseas employment but to create domestic conditions that make talented workers want to stay.

Greater investment in technology, research, education and high-value industries could generate more attractive career opportunities at home. Economic stability and reliable digital infrastructure would also be important for retaining professionals.

A Sign of Opportunity and Concern

The departure of more than 317,000 workers in only six months presents two sides of the same story. Overseas employment can provide Pakistanis with higher incomes and valuable international experience while increasing remittance flows into the country.

At the same time, the scale of the movement signals serious weaknesses in Pakistan’s domestic employment environment.

Unless the country can create more competitive salaries, stronger institutions and better professional opportunities, increasing numbers of Pakistanis may continue to look beyond its borders for their future.

The overseas employment boom may provide short-term economic relief, but reversing the underlying causes of the talent outflow will require long-term investment and meaningful improvements in Pakistan’s economic and professional landscape.

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Under the new Withholding Tax Card for 2026, individuals earning money through social media platforms will face a 5% withholding tax if they are active taxpayers, while non-filers will be subject to a higher 10% rate.

The new rates apply from July 1, 2026, and are part of the tax changes introduced through the Finance Act 2026.

Higher Rate for Non-Filers

The new rules fall under Section 154B of the Income Tax Ordinance, which covers certain payments made through social media platforms.

Content creators and influencers whose names appear on the FBR’s Active Taxpayers List will have 5% of their relevant social media income deducted as withholding tax. Those who are not included on the list will face a 10% deduction.

This means a creator’s tax status can have a direct impact on the amount deducted from their earnings.

For example, if an eligible social media payment is Rs1 million, the withholding amount would be Rs50,000 for an active taxpayer compared with Rs100,000 for a non-filer, based on the stated rates.

Impact on Pakistan’s Growing Creator Economy

Social media has created new income opportunities for thousands of Pakistanis. YouTubers, influencers, streamers, bloggers and other digital professionals can now earn through advertising, platform monetization, sponsorships and other online activities.

As this sector grows, the government is increasingly focusing on bringing digital earnings within the formal tax framework.

The higher rate for non-filers also fits into the broader policy of encouraging individuals to register with the tax authorities and comply with filing requirements.

What Creators Need to Consider

For people earning regularly from social media platforms, understanding their taxpayer status will become more important.

Creators should keep proper records of their online income and the taxes deducted from payments. They should also ensure that their tax information and filing status remain up to date.

It is worth remembering that withholding tax is generally collected in advance and may not necessarily represent the individual’s final tax liability. The ultimate tax treatment depends on the applicable income-tax rules and the taxpayer’s overall circumstances.

Property and Salary Taxes Also Revised

The updated FBR tax card does not focus only on social media earnings. It also incorporates changes affecting other areas, including the salaried sector and real estate transactions.

Withholding tax rates related to the purchase and sale of immovable property have been revised, while changes have also been made to taxation applicable to salaried individuals.

These adjustments form part of the wider amendments introduced through the Finance Act 2026.

Digital Income Comes Under Greater Scrutiny

The introduction of separate rates for filers and non-filers reflects the government’s broader effort to expand the formal tax base.

As more people earn income through digital platforms, online earnings are becoming harder to overlook from a taxation perspective. The latest measures indicate that content creators are increasingly being treated as part of the formal economic system rather than as a separate or informal category.

For creators, maintaining an active taxpayer status could therefore become financially important.

Conclusion

The revised withholding tax structure marks another significant development for Pakistan’s rapidly expanding creator economy. From July 2026, active taxpayers earning through covered social media arrangements will face a 5% withholding rate, while non-filers will face 10%.

The change is likely to encourage more digital earners to register, file their returns and maintain compliance with the FBR.

As Pakistan continues to strengthen taxation of digital income, social media professionals will need to become more aware of their tax obligations and keep accurate records of their earnings and deductions.

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Business leaders argued that high taxes, expensive energy, costly borrowing and complex tax procedures are making it increasingly difficult for companies to operate competitively. According to representatives of the business community, many industries are currently working at only around 40 to 45 percent of their production capacity.

Possible Cuts in Super Tax and Sales Tax

During the meeting, FBR Member Hamid Ateeq Sarwar said the government was reviewing the existing tax structure and considering additional reductions in the super tax as well as the sales tax burden.

The government has already introduced several tax-related relief measures since 2025. These include reductions in income tax for salaried individuals, cuts in super tax and the removal of super tax for exporters.

The FBR said the measures already introduced have resulted in a revenue impact of approximately Rs361 billion. Officials indicated that efforts to make the tax system more reasonable and business-friendly would continue.

While the possibility of further reductions is encouraging for businesses, the proposed measures have yet to become a finalized tax package. Companies will therefore need to wait for formal announcements and legal changes before the relief can be considered effective.

Businesses Demand Wider Tax Reforms

Business representatives said reducing super tax alone would not be enough to address the difficulties facing the private sector. They called for reductions in advance tax and withholding taxes, along with a review of customs duties.

They also raised concerns about the procedures used by FBR field offices. According to business representatives, excessive tax notices, complicated audits and aggressive enforcement are creating additional uncertainty for taxpayers.

Simplifying the audit process and establishing clearer rules could help businesses spend less time dealing with tax disputes and more time focusing on production, investment and expansion.

Expanding the Tax Base

Another major demand from the business community is a broader tax base.

Rather than increasing the burden on businesses and individuals who are already registered and paying taxes, representatives argued that the government should bring more businesses and economic activities into the formal tax system.

A wider tax base could potentially allow the government to collect more revenue without repeatedly increasing tax rates on existing taxpayers. It could also create a more balanced environment between compliant businesses and those operating outside the formal economy.

Industries Under Growing Pressure

The concerns raised by business leaders reflect the wider challenges facing Pakistan’s industrial sector. High electricity and gas costs, expensive financing and taxation have increased the cost of doing business.

Representatives warned that if these pressures continue, some companies could consider moving parts of their operations outside Pakistan in search of more competitive conditions.

Low capacity utilization is another concern. When factories operate well below their potential, businesses face difficulties covering fixed costs, while the wider economy loses opportunities for investment, exports and employment.

FBR Focuses on Taxpayer Facilitation

Alongside potential tax reductions, the FBR is also working on measures intended to improve taxpayer services.

Officials highlighted plans for a mobile application to facilitate tax reimbursements and designated taxpayer facilitation days in major commercial centers. Exporter facilitation committees have also been established in Karachi, Lahore, Sialkot, Faisalabad, Islamabad and Multan.

These initiatives could help improve communication between taxpayers and the tax authorities, particularly if complaints and refund-related issues can be resolved more quickly.

Transport Strike Adds to Business Concerns

The committee also discussed the ongoing goods transport strike and its impact on commercial activity.

Disruptions to the movement of goods can create serious problems for manufacturers, exporters and retailers. Perishable products face the risk of losses, while delays can also increase container detention and other logistics costs.

Committee convener Muhammad Talha Mahmood called for immediate negotiations with transporters to restore normal movement of goods and reduce the economic impact of the dispute.

He also recommended that taxpayers’ accounts be restored within 24 to 48 hours when genuine errors in tax returns have been corrected. An improved biometric verification system was another recommendation discussed during the meeting.

A Potential Shift Toward Business-Friendly Taxation

The latest discussions suggest that the government and FBR recognize the need to reduce some of the pressures facing Pakistan’s formal business sector. Lower taxes, simpler procedures and better taxpayer services could help improve investment and industrial activity.

However, meaningful reform will require more than temporary tax concessions. Businesses are also looking for consistency, transparency and predictable enforcement.

If the government succeeds in reducing unnecessary compliance costs while expanding the tax base, it could create a system that generates sustainable revenue without placing excessive pressure on existing taxpayers.

For now, the consideration of further super-tax and sales-tax relief is a positive signal for the business community. The real test, however, will be whether these proposals translate into concrete reforms that lower the cost of doing business and encourage companies to invest and expand within Pakistan.

The post FBR Signals More Tax Relief as Pakistani Businesses Push for Lower Costs appeared first on Pk Tax Calculator.

Bilal Bin Saqib, Minister of State and Chairman of the Pakistan Virtual Assets Regulatory Authority (PVARA), highlighted the progress during the authority’s third meeting. The session focused on the ongoing development of regulations governing virtual assets and the requirements that businesses will need to meet to operate within the sector.

Regulators Working on Licensing Rules

The meeting brought together senior representatives from several important government and financial institutions, including the Governor of the State Bank of Pakistan, the Finance Secretary, the Law Secretary, the Chairman of the Securities and Exchange Commission of Pakistan (SECP), and the Chairman of the Pakistan Digital Authority.

Officials reviewed the progress made on the proposed regulatory framework, with licensing and human-resource requirements among the key areas under consideration. According to the discussions, Pakistan is now approaching the stage where a complete licensing mechanism for virtual asset businesses can be established.

The move could provide greater clarity for companies seeking to offer crypto-related services in the country while also giving regulators a structured way to monitor the industry.

Focus on Responsible Crypto Growth

Bilal Bin Saqib described the development as an important milestone for Pakistan’s emerging virtual assets sector. He said the proposed framework is intended to be modern, transparent and based on risk assessment.

Rather than simply restricting the use of digital assets, the regulatory approach appears designed to create an environment where innovation can take place under clearly defined rules. At the same time, regulators want to reduce potential risks faced by consumers and investors.

A formal licensing system could also help distinguish legitimate and compliant virtual asset businesses from unregulated operators, potentially improving confidence in the market.

Protecting Consumers and Investors

One of the major objectives of the proposed framework is stronger protection for people participating in the virtual asset market. Clear licensing requirements can establish standards that businesses must follow before providing services to customers.

Greater regulatory oversight could also improve transparency across the industry and help authorities address risks associated with financial crime, market misconduct and inadequate consumer safeguards.

For investors and crypto users, the introduction of clear rules could eventually make it easier to identify which platforms and service providers are operating within Pakistan’s regulatory framework.

A Step Toward a Digital Economy

Pakistan’s move toward formal virtual asset regulation comes as digital finance continues to develop globally. By establishing a structured regulatory environment, the country aims to encourage legitimate investment and support innovation while maintaining financial and consumer safeguards.

PVARA has indicated that it intends to develop a regulatory system that is aligned with international practices. This could help Pakistan create stronger connections with the wider digital-asset ecosystem while ensuring that businesses operating domestically meet appropriate regulatory standards.

What Comes Next?

The immediate focus remains on completing the regulatory framework and finalizing the requirements for licensing virtual asset service providers. Once the system is fully established, crypto-related businesses will have greater clarity regarding the standards they must meet to operate legally within the country.

For Pakistan’s growing digital economy, the development represents an important transition. The country is moving toward a model in which virtual assets can potentially operate within a defined legal and regulatory structure rather than remaining in an uncertain regulatory environment.

While the final rules and implementation details will determine how the system works in practice, Pakistan’s progress toward a comprehensive VASP licensing regime signals a significant change in the country’s approach to cryptocurrency and virtual assets.

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According to recent reports, more than 30% of beverage manufacturing in Pakistan operates through unregistered or counterfeit facilities. Since these businesses function outside the formal economy, they are not covered by the Federal Board of Revenue’s (FBR) latest electronic monitoring framework, raising concerns about fair competition and revenue losses.

To improve oversight of the documented sector, the FBR issued Sales Tax General Order (STGO) 07/2026 under the Sales Tax Act, 1990. The order requires all registered beverage manufacturers, including toll manufacturers, to install an Electronic Production Monitoring System (EPMS) that records production activities and transmits data directly to the FBR in real time.

The new system uses advanced technology such as barcode scanners, product-counting sensors, industrial computers, programmable logic controllers (PLCs), IP cameras, network video recorders, and other monitoring equipment. Together, these tools allow tax authorities to track production volumes, identify unexpected interruptions in manufacturing, and analyze production trends using real-time data.

Only vendors approved by the FBR are authorized to install and maintain the monitoring equipment, ensuring that the system follows standardized technical requirements. Dedicated officials from the Inland Revenue department have also been assigned to coordinate the implementation process with manufacturers and service providers.

Tax professionals believe the digital monitoring initiative represents an important milestone in the FBR’s broader strategy to modernize tax administration. By capturing production data electronically, the authority expects to reduce under-reporting, improve compliance, and increase government revenue from one of the country’s major manufacturing sectors.

Despite these advancements, the biggest obstacle remains the illegal segment of the industry. Factories operating without registration or producing counterfeit beverages continue to avoid taxation and regulatory oversight. As long as these businesses remain outside the documented economy, the government’s electronic monitoring system will only cover part of the market.

Industry experts suggest that while digital monitoring is a positive development for registered manufacturers, stronger enforcement against illegal production units is equally important. Without bringing undocumented factories into the tax net, the government may continue to lose substantial revenue while compliant businesses face unfair competition from untaxed producers.

The success of Pakistan’s digital tax reforms will therefore depend on two parallel efforts: ensuring accurate production monitoring for documented manufacturers and strengthening enforcement to identify and eliminate illegal beverage factories. Together, these measures could help create a more transparent, competitive, and accountable manufacturing sector while boosting the country’s tax revenues.

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The proposed reforms aim to address long-standing challenges such as mounting circular debt, inefficient pricing mechanisms, and limited private sector participation. If approved and implemented, the changes could reshape how natural gas is transported, sold, and priced across the country.

A New Tariff System for Greater Stability

A key feature of the reform plan is the introduction of a Multi-Year Tariff (MYT) framework. Instead of revising tariffs every year, gas utilities would operate under a longer-term pricing structure. This approach is intended to provide greater financial certainty for gas companies while encouraging investment in infrastructure and improving operational planning.

The tariff model will be based on internationally recognized principles, including the Regulatory Asset Base (RAB) and Weighted Average Cost of Capital (WACC), allowing companies to earn regulated returns while maintaining service standards.

Restructuring Pakistan’s Gas Utilities

The reform roadmap proposes splitting the country’s two major gas distribution companies—Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL)—into separate business units.

Each company would be divided into:

• A gas transmission company responsible for transporting natural gas.
• A Regulated Gas Sales (RGS) business serving domestic and protected consumers.
• A Competitive Gas Sales (CGS) business supplying industrial and commercial customers in an open market.

This separation is expected to improve transparency, increase operational efficiency, and encourage healthy competition.

Opening the Market to Private Companies

To reduce the state’s dominance in gas supply, the government plans to launch a Gas Market Release Programmed.

Under this initiative, private companies would gradually gain access to gas supplies through competitive auctions. The roadmap proposes releasing 20 percent of available gas volumes in the first year, followed by an additional 10 percent annually over the next two years.

The gradual transition is intended to create a competitive marketplace without causing major disruptions to existing consumers.

A Shift Toward Market-Based Pricing

One of the most important objectives of the reform package is to move toward cost-reflective gas pricing.

Currently, many gas consumers benefit from broad subsidies, while commercial and industrial users often pay higher prices to offset those costs. This system has contributed to financial losses and increasing circular debt.

The proposed reforms seek to replace blanket subsidies with targeted financial assistance for low-income households. Over time, gas prices would better reflect the actual cost of supply, while protecting vulnerable consumers through focused support programs.

Addressing Circular Debt

Pakistan’s gas sector has struggled with growing circular debt, limiting the financial health of public utilities.

To address this issue, the roadmap recommends establishing a dedicated holding company that would take over existing receivables and liabilities. This would allow the newly restructured operating companies to begin with cleaner balance sheets and improve their financial performance.

The government also plans to review existing contracts throughout the gas supply chain, including LNG import agreements, to align them with the new market structure.

Strengthening Regulation

Successful implementation will require significant regulatory reforms.

The government intends to update licensing rules, transmission and distribution regulations, and third-party access frameworks. New measures will also be introduced to improve transparency, strengthen market oversight, and prevent anti-competitive practices.

The Oil and Gas Regulatory Authority (OGRA) is expected to receive enhanced responsibilities, including establishing a dedicated market monitoring function to oversee competition and market behavior.

Challenges Ahead

While the proposed reforms offer significant long-term benefits, implementation will not be easy.

Moving toward cost-reflective tariffs may result in higher gas prices for many consumers, making public acceptance a major challenge. The government plans to ease this transition through targeted subsidies and gradual price adjustments.

In addition, legal amendments, approvals from the Council of Common Interests and the federal cabinet, coordination with provincial governments, and institutional capacity building will all be essential before the reforms can move forward.

Looking Ahead

The roadmap represents a bold effort to modernize Pakistan’s gas sector and place it on a more sustainable financial footing. By encouraging competition, improving regulatory oversight, attracting private investment, and reforming pricing mechanisms, the government hopes to create a more efficient and resilient energy market.

Although the implementation process is likely to take time and require broad political and institutional support, these reforms could play a crucial role in strengthening Pakistan’s energy sector and ensuring a more reliable gas supply for future generations.

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The rise in the deficit was mainly driven by a sharper increase in imports compared with export growth. During July 2026, Pakistan’s exports improved by 9.54% year-on-year to $2.939 billion, up from $2.683 billion recorded in the same month a year earlier. However, imports grew at a much faster pace, climbing 18% to $6.887 billion from $5.837 billion in July 2025.

Exports Show Positive Momentum

The increase in exports reflects a gradual improvement in Pakistan’s ability to generate foreign exchange through international trade. Export earnings rose by nearly $256 million compared with July last year, suggesting stronger performance from key exporting sectors.

On a monthly basis, exports recorded a substantial improvement, rising 31.09% from $2.242 billion in June 2026 to $2.939 billion in July. This monthly jump indicates improved export activity at the beginning of the new financial year.

Rising Imports Put Pressure on Trade Balance

Despite stronger exports, the rapid increase in imports remained a challenge. Imports expanded by $1.05 billion compared with July 2025, reflecting higher demand for foreign goods, raw materials, machinery, and other imported products.

The faster growth in imports compared with exports resulted in a wider trade imbalance, highlighting Pakistan’s continued dependence on imported goods and the need to strengthen domestic production capacity.

Monthly Deficit Shows Improvement

While the annual trade deficit widened, the month-to-month trend showed some improvement. The trade deficit declined by 15.22%, falling from $4.657 billion in June 2026 to $3.948 billion in July.

This improvement came as exports increased sharply during the month, while imports remained almost stable, declining slightly by 0.17% from June’s level of $6.899 billion.

Impact in Rupee Terms

The trade deficit also increased when measured in Pakistani rupees. The deficit rose 22.73% year-on-year to Rs1.10 trillion in July 2026 compared with Rs896.388 billion in July 2025.

Exports in rupee terms reached Rs817.246 billion, showing a 7.17% annual increase, while imports climbed 15.58% to Rs1.917 trillion.

On a monthly basis, rupee-based exports improved by 30.94%, while imports decreased marginally by 0.29%. As a result, the rupee trade deficit narrowed by 15.3% compared with June 2026.

Outlook for Pakistan’s Trade Sector

The latest figures present a mixed picture for Pakistan’s economy. The improvement in exports is a positive development and indicates progress in earning foreign currency through trade. However, the continued faster growth of imports remains a major concern for the country’s external balance.

To reduce the trade gap over the long term, Pakistan will need to focus on expanding export industries, increasing value-added exports, encouraging local manufacturing, and reducing reliance on imported products.

Although July’s monthly performance offers some relief, maintaining export growth while managing import demand will remain crucial for achieving a more sustainable trade position.

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