Pakistan Launches First National SME & Worker Formalization Roadmap

Islamabad, 12 December 2025 The Ministry of Industries and Production (MoIP) and the Small and Medium Enterprises Development Authority (SMEDA), in collaboration with the International Labour Organization (ILO), formally launched Pakistan’s first National SME and Worker Formalization Roadmap. Developed under the SME and Worker Formalization and Just Transition Project, this initiative provides a unified, evidence-based national approach to simplifying business registration, strengthening labour compliance, supporting supply chain due diligence, and enabling SMEs and workers to participate more fully in the formal economy.

Pakistan continues to face widespread informality, with 84 percent of the workforce operating outside the formal sector. This undermines productivity, limits access to finance, weakens global competitiveness, and makes it difficult for enterprises to meet international requirements such as GSP+ commitments, EU Green Deal provisions, and emerging global due-diligence standards. The Roadmap responds to these challenges by aligning national perspectives and introducing practical, sequenced reforms that make formalization more accessible and beneficial for SMEs.

In his welcome address, Mr. Geir T. Tonstol, Director ILO Country Office for Pakistan, stated that this launch represents an important step toward strengthening Pakistan’s economic foundations and advancing decent work. He emphasized that formalization is fundamentally about people, supporting enterprises to grow and ensuring workers receive essential protections, opportunities, and dignity. He noted that the Roadmap’s focus on simplifying procedures, improving compliance mechanisms, and enabling SMEs to meet global standards will contribute to a more resilient and inclusive economic environment. He reaffirmed the ILO’s commitment to supporting the Government of Pakistan and SMEDA in this national effort.

Speaking at the event, Ms. Nadia Jahangir Seth, CEO SMEDA, emphasized that SMEs are central to Pakistan’s economic activity and that formalization is vital for unlocking their growth potential. She reaffirmed SMEDA’s commitment to strengthening the SME Registration Portal, expanding advisory and business development services, and supporting SMEs and home-based workers in meeting sustainability and traceability requirements. She noted that the Roadmap is the result of a year-long collaborative effort that documents sector challenges and provides a unified framework for simplifying registration and improving compliance pathways. She added that SMEDA will advance the SME One Window Initiative and ensure informal enterprises are actively engaged in policy dialogue through both digital and physical outreach platforms.

Speaking on the Roadmap’s significance, the Secretary Industries & Production, Mr. Saif Anjum highlighted that the initiative reflects government’s effort driven through the Ministry’s Technical Working Group. The Roadmap, he noted, presents realistic and actionable pathways for simplifying SME onboarding, harmonizing labour definitions across federal and provincial institutions, and expanding digital mechanisms for easing compliance. He stressed that Pakistan cannot strengthen its economic structure while a vast majority of workers and enterprises remain informal, and reiterated MoIP’s commitment to guiding coordinated implementation at the national level.

Delivering the keynote address, the Special Assistant to the Prime Minister on Industries and Production, Mr. Haroon Akhtar Khan, described the Roadmap as a central pillar of Pakistan’s economic transformation. He explained that formalization expands opportunities by improving access to finance, technology, export markets, and decent work. With 44 percent of GDP remaining informal and millions of workers outside social protection, he emphasized the need for structural reforms that align Pakistan with modern supply chain expectations. He also highlighted the value of the Roadmap’s sector-specific actions in garments and auto parts, where compliance and traceability increasingly shape market access.

Looking ahead, ILO and SMEDA will roll out nationwide awareness programs, capacity-building workshops, and technical support to help SMEs navigate the transition to formalization. Helpdesks in Lahore and Karachi are already operational, and new digital tools, enterprise training modules, and sector-based pilot initiatives will guide SMEs in adopting formal practices and strengthening their integration into national and global value chains.

The launch of the National SME and Worker Formalization Roadmap marks a significant milestone for Pakistan. By promoting stronger institutions, higher productivity, and improved working conditions, this initiative sets the foundation for a more competitive, resilient, and sustainable economic future.