Islamabad – Mubashir Akram, Country Director of ACT Alliance Pakistan, told a seminar at a private university in Islamabad that illegal trade and tax evasion are steadily weakening Pakistan’s fiscal capacity and undermining the state’s ability to exit repeated stabilization cycles. Citing Pakistan Business Council (PBC) estimates, he noted that the combined value of smuggling, under-invoicing, mis-declaration, counterfeiting, and adulteration has been estimated at US$ 68 billion, with an estimated annual tax loss of Rs. 8 trillion linked to illicit trade.
Addressing participants, Akram said the most visible pressure points include POL, tobacco, real estate, tea, pharmaceuticals, and consumer products, where illegal supply chains undercut compliant businesses and reduce revenue collection. He referenced PBC’s identification of vulnerable product categories, including tea, cigarettes, medicines, petroleum products, and consumer goods such as cosmetics, appliances, and auto-parts, stressing that these markets illustrate how illicit networks penetrate routine retail channels.
“Illegal trade is not only a revenue issue, but it is a governance issue,” Akram said. “When POL and tobacco move through non-duty-paid channels, and when real estate remains heavily informal, Pakistan’s tax base stays narrow, the burden shifts to the documented few, and the country stays exposed to recurring IMF pressure.”
Linking the economy to national security, Akram said illicit trade generates unaccounted cash flows that can be diverted to criminal and anti-state elements. “These actors are agents of economic sabotage,” he said. “If Pakistan does not disrupt illicit money at scale, the fiscal state weakens, enforcement capacity degrades, and space expands for networks that thrive on instability.”
Akram acknowledged recent enforcement momentum, particularly during the last quarter of 2025, and urged continuity. He cited official and publicly reported actions, including Pakistan Customs’ multi-city operations targeting smuggled cigarettes and raw materials valued at over Rs. 1.1 billion (October 2025), and enforcement actions against illicit tobacco in Mardan with an officially stated potential revenue implication of Rs. 19 billion (December 2025).
Referencing the anti-smuggling drive in POL, Akram cited reported government briefings that described an 82 percent revenue increase from July to November 2025, linked to petroleum anti-smuggling measures, including pump registration and transport monitoring. “POL is a frontline test,” he said. “If enforcement holds in POL and expands through the supply chain, the same discipline can be applied to tobacco and to retail markets where illicit goods are openly sold.”
He also emphasized the retail end of the chain, citing public-sector statements describing seizures in Karachi and Balochistan that included smuggled cigarettes and a wide range of consumer goods. “Warehouse seizures matter, but retail visibility matters too,” he said. “Illegal goods must become difficult to sell, not merely difficult to import.”
On structural reform, Akram said Pakistan’s path away from repeated reliance on the IMF runs through documentation, enforcement, and base broadening, including the untaxed and informal segments such as retail and real estate, which the IMF itself has highlighted as areas for expanding the tax net. “If POL leakage, tobacco leakage, and real estate informality continue, Pakistan will keep cycling back to the IMF,” he said. “The way out is sustained compliance pressure plus credible prosecution across the chain.”
ACT Alliance Pakistan called on the government and law enforcement agencies to continue building pressure against illegal trade networks, expand market checks against non-duty-paid goods, and strengthen prosecution so that enforcement gains translate into deterrence.