Page 74 - CMA Journal (May-June 2025)

Focus Section

Figure 7: Climate Policy Uncertainty Index (Monthly)

450.0
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2024 2024 2024 2024 2024 2024 2024 2024 2024 2024 2024 2024 2025 2025 2025

JAN FEB MAR APR MAY JUNE JULY AUG SEPT OCT NOV DEC JAN FEB MAR

Source: Economic Policy Uncertainty - https://www.policyuncertainty.com/pakistan_cpu.html
This CPU volatility adds a third destabilizing dimension to producer-led sectors such as electronics and auto
Pakistan’s fragile industrial backdrop. Factories already parts. Reliable export contracts and technology
struggle with erratic energy supply (load-shedding, transfer would bolster domestic value addition,
circular debt) and import uncertainty—now they also strengthen Pakistan’s Economic Sustainability Index
face unclear and shifting climate regulations. This through higher export earnings and foreign
combination of disruptions further undermines exchange inflows, and reduce reliance on volatile
confidence, curtails green investment, and directly feeds commodity markets.
into the QIM and annual output volatility already
3) Port City Colombo Model: Expanding a network of
illustrated in Figures 5 and 6.
over 45 Double Tax Avoidance Agreements and 28
In short, Pakistan is not just caught in a growth trap—it is Investment Promotion Treaties, as Sri Lanka has
mired in overlapping fragilities: economic, energy, and done, will recreate the legal certainty that underpins
environmental. Without policy coherence and structural investor confidence. Clear tax regimes and
reform, CPU spikes will continue to undermine the fragile repatriation guarantees will boost foreign direct
rebound, limiting the country’s ability to convert modest investment into Pakistan’s zones, improving its World
growth into truly sustainable business resilience. Sentiment Index as businesses perceive lower risk
and greater predictability—critical ingredients for
What Pakistan Can Learn from lasting economic resilience.
SAARC Countries? 4) Power Sector Incentives & Hydropower PPPs:
Nepal has pioneered several innovative industrial
1) Establish an Economic Commission: Adopting Sri
reforms that Pakistan could adapt to enhance its
Lanka’s Economic Commission model would give
own economic indicators. Nepal’s promotion of
Pakistan a single, empowered body to manage SEZs,
private hydropower through VAT exemptions,
EPZs, STZs, and the Gwadar Free Zone—streamlining
“take-or-pay” PPAs, and open investment from
approvals, reducing red tape, and ensuring policy
Indian and Chinese developers sparked a surge in
stability. By channeling strategic investments into
reliable, affordable energy supply. In Pakistan, similar
manufacturing clusters, this reform would smooth
incentives would reduce load-shedding-related
out the erratic monthly swings in the Quantum Index
disruptions, stabilize manufacturing output and the
of Large-Scale Manufacturing and help turn
QIM of Large-Scale Manufacturing, and support
short-term spikes into sustained capacity growth,
consistent annual industrial growth. Cleaner energy
thereby lifting annual industrial production rates.
tied to VAT benefits would also improve
2) Global Buyer-Led Networks: Emulating Sri Lanka’s environmental metrics, potentially boosting
integration into buyer-led apparel networks—where Pakistan’s Business Sustainability Index and investor
lead firms like H&M and Zara guarantee sales sentiment by demonstrating a commitment to
volumes and technical standards—can help Pakistan sustainable infrastructure.
diversify beyond textiles into higher-value,
72 ICMA’s Chartered Management Accountant, May-June 2025