A year after Pakistan's Finance Act 2025 introduced 13 reforms aimed at curbing smuggling, tax evasion, and counterfeit goods, not a single measure has reached full operational capacity. A joint assessment by the Policy Research Institute of Market Economy (PRIME) and the Transnational Alliance to Combat Illicit Trade (TRACIT) reveals that implementation gaps, not legislative intent, are the primary bottleneck. The findings, presented at an event in Islamabad, underscore a widening disconnect between policy ambition and on-the-ground execution. Main Developments Using a four-stage tracking framework—Stage 0 (Legislation Only) through Stage 3 (Fully Operational)—the brief categorizes each reform's progress. Three reforms have reached Stage 2 (Partially Operational), where enforcement agencies can act using existing capacity. The Faceless Customs Assessment System has reduced container clearance time in Karachi by 39 percent. New rules presuming tampered vehicles to be smuggled have led to over 119 seizures in Quetta and Peshawar. Provincial officers, newly empowered against counterfeit goods, have seized more than 86,000 illegal cigarette packets in Punjab and sealed a tobacco manufacturing unit. Six reforms sit at Stage 1 (Administratively Initiated), requiring new technology or systems that are moving slowly. The Digital Cargo Tracking System, designed to monitor every cross-border shipment in real time, remains in the design phase after a South Korean firm was contracted in March; rollout is expected in about 18 months. Digital Enforcement Stations planned for high-risk smuggling routes have only five stations partially set up, with their central control room not yet operational. Read also: Pakistan Secures $629.5M in Pharma Deals at China B2B Conference Four reforms remain stuck at Stage 0, having not moved beyond the law itself. The Customs Command Fund, meant to reward informers and enforcement officers, has been notified but has made no payments. Curbs on high-value transactions by non-filers, a bank-FBR data-sharing mechanism, and new powers to freeze accounts and block property transfers for unregistered persons all await government notification to take effect. Background Pakistan ranks 101 out of 158 countries on the TRACIT Illicit Trade Index 2025, scoring lowest on monitoring goods within domestic supply chains. The Finance Act 2025 was intended to close this gap through 13 targeted reforms, but the brief indicates that progress depends less on new laws and more on institutional change. Saud Bangash, Resident Director of the Pakistan Business Council, noted that illicit trade encompasses any commercial activity outside the formal net, actively spoiling the market for the formal sector and contributing to de-industrialization. The framework was developed to assess each reform against government objectives, identify where implementation falls short, establish a baseline for monitoring outcomes, and evaluate efforts in curtailing the grey market. Private sector representatives at the event echoed concerns about the scale of the problem. Fahad Barlas, Vice President of the Rawalpindi Chamber of Commerce and Industry, called counterfeit goods and smuggling the "biggest menaces" hampering micro and macroeconomic stability. Engineer Arshad Dad, Chief Advisor of the Constructor Association of Pakistan, argued that the core issue is a lack of political will, urging authorities to map and eradicate illicit manufacturing hubs directly. Why It Matters Illicit trade costs Pakistan billions in lost tax revenue, undermines legitimate businesses, and fuels de-industrialization. The brief warns that reforms requiring institutions to change how they work are falling behind and need urgent attention. Without full implementation, the government's stated goals of reducing smuggling and tax evasion will remain unmet, perpetuating a cycle where the informal economy thrives at the expense of the formal sector. The gap between legislation and enforcement also erodes public trust in the state's capacity to govern effectively. What's Next Rana Ihsaan Afzal, Coordinator to the Prime Minister (Commerce), acknowledged that success depends on provincial ownership, citing the recently rolled out National Tariff Policy that aims to reduce incentives for smuggling by moving toward zero Additional Customs Duty, zero Regulatory Duty, and four slabs of customs duty peaking at 15 percent. The Digital Cargo Tracking System's rollout is expected in about 18 months, but the four Stage 0 reforms remain contingent on government notifications that have not yet been issued. Enforcement agencies are operating in reform areas where existing infrastructure suffices, but the six Stage 1 reforms will require sustained political will and inter-agency coordination to advance. The private sector continues to press for direct action against illicit manufacturing hubs.