Pakistan Launches Regulatory Overhaul to Ease Business Burdens

ISLAMABAD – Pakistan’s Board of Investment has introduced the SMART (Sectoral Mapping & Regulatory Transformation) initiative, aimed at streamlining regulations across sectors. Supported by the UK-funded REMIT project, the program targets excessive rules that delay business operations and encourage informal practices.

The effort, endorsed by federal and provincial governments, involves reviewing hundreds of regulations. Planners intend to eliminate outdated rules, abolish unnecessary approvals and shift low-risk processes online. The approach draws from an IMF report that links complex regulations to economic distortions, including higher costs for compliant businesses.

Key changes include cutting medical device registration time from 872 days to 21 days. The reforms are projected to eliminate 600,000 paper documents annually and reduce administrative hours spent on approvals.

Central to the initiative is the Asaan Karobar Act 2025, which mandates clearer rules, simpler licensing based on objective criteria and greater use of digital systems. Officials say these steps will reduce discretion in approvals, potentially curbing bribery opportunities.

Prime Minister Shehbaz Sharif called the reforms a “quantum leap” for investment, while his special assistant on investment described them as a “turning point.” Independent estimates project annual savings from lower compliance costs in the hundreds of billions of rupees, with potential gains in investment, exports and firm growth.

The Cabinet Committee on Regulatory Reforms has approved 472 measures for implementation across sectors. However, officials acknowledge challenges, including resistance from groups benefiting from the status quo and the need for consistent enforcement.

Pakistan’s economy has faced slow growth and high poverty rates, partly due to regulatory hurdles that favor connections over efficiency. Proponents argue that easing these barriers could broaden the tax base, attract foreign investment and support job creation by allowing firms to focus on operations rather than bureaucracy.