May 2, 2025: Pakistan has been ranked 101 out of 158 countries in the 2025 Illicit Trade Index, according to a report published by The News International, raising serious concerns about the country’s economic integrity and its ability to attract foreign investment.
The report titled “Pakistan’s Battle Against Illicit Trade: An Analysis of Challenges and Pathways to Resilience”, jointly released by the Policy Research Institute of Market Economy (PRIME) and the Transnational Alliance to Combat Illicit Trade (TRACIT), highlights an estimated annual revenue loss of Rs 751 billion due to illegal trade. The tobacco sector alone accounts for Rs 300 billion of these losses.
Five key sectors driving the illicit trade crisis include:
- Tobacco: Rs 300 billion
- Petroleum products (petrol and diesel): Rs 270 billion
- Tyres and lubricants: Rs 106 billion
- Pharmaceuticals: Rs 60–65 billion
- Tea: Rs 10 billion
Pakistan received a score of 44.5 on the Illicit Trade Index, below the global average of 49.9. Among the six dimensions of the index:
- Trade, Customs, and Borders scored the highest at 75.4, reflecting effective border and customs controls.
- In contrast, Supply Chain Intermediaries (25.9) and Sectoral Illicit Trade Indicators (29.3) scored particularly low, highlighting weak internal trade monitoring and compliance enforcement.
Other areas also show moderate performance:
- Taxation and Economic Environment: 47.3
- Regulatory Framework and Enforcement: 46.4
- Criminal Enablers of Illicit Trade: 42.7
The report underscores that while border management is relatively robust, systemic internal weaknesses in trade regulation, supply chain monitoring, and law enforcement hinder Pakistan’s ability to curb illicit trade effectively.
Experts warn that without deeper structural reforms, the ongoing illicit trade could further destabilize Pakistan’s economy and deter much-needed foreign investment.