Enterprise formalization is the process of bringing a business into the legal economy by registering it, complying with tax, labor, and regulatory requirements, and gaining access to official support. It helps businesses grow, access finance, and protect workers’ rights.

Most SMEs in Pakistan operate informally, limiting their ability to access finance, new markets, and government support. Formalization strengthens credibility, unlocks business opportunities, ensures compliance with international standards, and helps enterprises compete globally.

It is a joint initiative to help SMEs move from informality to formality through a national roadmap, advisory helpdesks, training, toolkits, digital tools, and awareness campaigns—while ensuring that workers benefit from decent work and social protection.

ILO Recommendation 204 (2015) is a global framework guiding countries on how to support enterprises and workers in the transition to the formal economy. It emphasizes simplifying registration, creating incentives, ensuring fair enforcement, and promoting social protection.

Helpdesks in Lahore and Karachi for one-on-one advisory, training and toolkits for step-by-step guidance, digital self-assessment tools to check readiness and compliance, financial and consultancy support to meet certification and export requirements, and awareness campaigns on the benefits of formalization.

Yes. Formalization improves wages, working conditions, and access to social security for employees, creating more decent and sustainable jobs.

The initial focus is on textiles and automotive sectors because they are critical to Pakistan’s exports and employ large numbers of workers, but the learnings will apply across other sectors as well.

No. It is a gradual and integrated process. Enterprises are at different stages of development, so support is tailored—some may need help with registration, while others may need skills, finance, or compliance support.

Key barriers include complex registration processes, high compliance costs, lack of awareness of benefits, and limited enforcement in certain sectors. This project addresses these gaps by simplifying, incentivizing, and supporting SMEs.

“Just Transition” ensures that as SMEs adapt to global changes—such as climate requirements and evolving export standards—both businesses and workers are supported, and no one is left behind.

Formalization expands the tax base, strengthens public services, supports private sector growth, and creates more and better jobs—a win-win for enterprises, workers, and society.

Visit the SME Registration Portal (SMERP), contact the SMEDA–ILO helpdesks in Lahore or Karachi, or explore the project’s official webpage to access toolkits, training, and advisory support.