There is a particular kind of policy that feels decisive in the cabinet room and is catastrophic on the street. The proposed early market closure falls squarely into that category.
The thinking behind it is understandable – the grid is under stress and someone in authority wants to be seen acting. But wanting to act and knowing what to do are very different things. Shutting down markets at an arbitrary time of day is not a solution. It is a signal of surrender dressed up as governance.
Let us start with the basic reality that every trader, manufacturer and shopkeeper understands, even if every bureaucrat does not: you cannot stop the economic wheel. Commerce does not switch off because a notification has been issued. Demand does not disappear. Families still need to eat.
What changes when you force formal markets to close is not the volume of economic activity but who captures it. The customer who cannot reach the registered retailer will find an unregistered one. The transaction that cannot happen at a documented shop will take place at a cart, a roadside stall or with a WhatsApp contact. The revenue is not destroyed. It is simply transferred out of the tax net, out of documentation and out of the state’s visibility entirely.
This matters enormously because Pakistan’s documented, tax-compliant retail and business sector is not in robust health. It is under severe and sustained pressure. It is already losing market share – not because it is less efficient or because its products are inferior, but because it operates under a tax burden that its informal competitors simply ignore. The undocumented sector undercuts prices through under-invoicing, avoids GST, pays no corporate or income tax and incurs no regulatory compliance costs. The formal sector absorbs all of these – and still tries to compete. The result is a steady migration of economic activity away from the documented base. The tax net is not widening. It is quietly contracting.
Into this already fragile situation, the government now proposes to impose early market closures that will fall exclusively on the formal sector. Registered businesses will comply. Unregistered ones will not – they never do. The policy will not level the playing field but will tilt it further. Every evening hour that the compliant retailer loses, the informal trader gains. The state will collect less tax, not more. The formal economy will shrink, not stabilise.
The conversation around market closure focuses almost entirely on the visible retailer – the shopkeeper, the mall, the high street. But the economic damage runs far deeper than the storefront. Behind every retail business is a supply chain: manufacturers producing the goods, packaging suppliers producing the boxes and bags, logistics companies moving the inventory and small-scale distributors bridging the factory and the shelf. When retail orders collapse – and they will collapse if trading hours are slashed – every link in that chain is hit simultaneously. Manufacturing units lose orders. Packaging suppliers lose contracts. Delivery workers lose routes. These are real jobs, real livelihoods, real families – and they will disappear faster than any government scheme can replace them.
Unemployment generated this way is not temporary. Markets disrupted by policy-driven closures do not simply restart when the policy is reversed. Investors who exit do not quickly return. Staff dismissed in a crisis are not easily rehired. Suppliers who lose anchor clients pivot to other markets or shut down entirely. The ratchet effect of forced business closures is well-established: the damage is asymmetric. It is quick to inflict and slow, sometimes impossible, to undo.
None of this means the energy challenge is not real. It is. But the proposed solution targets the wrong source. Commercial retail accounts for a small fraction of the national grid load. Industry, residential air conditioning, and agriculture draw far more. Closing markets at eight in the evening does not reduce total consumption; it compresses it into peak hours, meaning cooling systems work harder, crowds are denser and load spikes rather than falls. The net energy saving, by any serious technical assessment, is negligible. The economic cost is not.
Meanwhile, the actual lever that could make a meaningful difference sits largely unused: transmission and distribution losses driven by electricity theft. These losses – running into billions of rupees annually – exceed any conceivable savings from retail closure. Targeted enforcement against high-theft feeders, smart metering and genuine accountability in distribution companies would restore real power to the grid without touching a single job or closing a single business. Time-of-use tariffs could incentivise commercial users to shift load to off-peak hours without mandating closure. Energy-efficiency subsidies for small retailers – LED lighting and inverter-based cooling – would permanently reduce consumption while supporting viability.
These approaches require more work, more political will and more technical capacity than issuing a blanket closure notification. That is precisely why they are the right answers.
There is a deeper principle at stake here, one that should govern Pakistan’s economic policy at every level: the state must support the documented, tax-compliant sector instead of punishing it. This sector is the foundation of any sustainable fiscal future. It is the source of income tax, sales tax and corporate contribution. It is the sector that follows the rules, maintains records and participates in the formal economy. And it is the sector that is currently being squeezed from every direction simultaneously – high taxation, inflationary input costs, competition from an untaxed informal economy and now the prospect of having its trading hours arbitrarily cut.
Every policy that makes it harder to operate a compliant formal business is a policy that pushes more activity underground. Every business that goes informal is a business that stops paying tax, stops maintaining records and stops contributing to the documented economy the government depends upon. The informal sector does not just exist despite government policy – it often grows because of it.
Pakistan cannot afford to drive more of its economy into the shadows. It cannot afford to tell its most rule-abiding businesses that compliance will be rewarded with restrictions while non-compliance faces none. It cannot afford to generate waves of unemployment in manufacturing, packaging, retail and logistics at a moment when household incomes are already stretched to breaking point.
The wheel of commerce does not stop. It cannot be stopped. It can only be steered – towards formality or away from it, towards documentation or away from it, towards a broader tax base or a narrower one. The choice of direction is a policy choice, made afresh with every notification, every restriction, every decision about who bears the cost of a crisis they did not create.
This government – like every government before it – faces a choice. It can navigate positively by cracking down on theft, reforming tariffs, supporting efficiency and backing businesses that play by the rules. Or it can reach for the easiest lever available, shut things down, call it a policy and move on while the damage accumulates quietly in the streets.
But here is the truth no notification can change: you do not fix a river by building a wall across it. You fix it by clearing what is blocking the flow. The blockages in Pakistan’s economy are theft, under-invoicing and a non-compliant informal sector operating in plain sight. Clear those, and the wheel turns, the grid stabilises, and the tax base grows. Leave those untouched and punish the compliant instead, and you will not just have closed the markets; you will have sent every honest business in this country the same message: that honesty does not pay.
That is not a message any government can afford to send – and not one any economy survives for long.
The author is a business leader and policy advocate focused on export-led growth, employment generation and competitiveness in emerging economies. He can be reached at: [email protected]
