[{"bbox": [96, 153, 1136, 472], "category": "Text", "text": "compliance, promote good governance, facilitate product and market diversification, and link production networks with value chains. Moreover, increase in production and value addition has the potential to impact employment levels in the industry. While large exporting companies can proactively adapt their production to stay compliant and competitive, SMEs mostly lack both the technical and financial capabilities to keep pace with developments regarding resource efficiency, productivity, and compliance. Furthermore, the business environment is not conducive for sustainable development of SMEs, as individual green solutions, such as modernising production equipment to be more resource-efficient, building wastewater treatment plants or raw material recycling facilities, and developing renewable energy solutions, are not economically feasible on a small scale, and most industrial sites lack functioning common solutions. Environmental legislation is not consistently enforced, and support services like the Export Development Fund (EDF) under the Ministry of Commerce (MoC) are not effectively implemented. It is export-oriented SMEs that require the most support to drive sustainable export-led growth and hence will be the focus of the action."}, {"bbox": [96, 496, 1136, 738], "category": "Text", "text": "The action aligns with both Green Alliances and Partnerships\" and \"Partnerships for human development, peace, and governance, including the business environment.\" It will promote good governance, foster dialogues, improve the business environment, and enhance GSP+ compliance, building on AAP 2015 and 2016 (Promotion of HR and GSP+ Compliance) as well as AAP 2023 actions on Human Rights. This initiative will continue to build on the work accomplished in previous AAPs (2017, 2022) to support the sustainable green growth of SMEs and MSMEs in Pakistan. The action strategy, designed to operate at multiple levels and encompassed in various flagship programs, has been structured in this manner considering the transformative effect and multisectoral influence that trade could have on development. It also aims to create an enabling environment under the Global Gateway 360 approach to promote sustainable financing for sustainable growth in the country."}, {"bbox": [96, 762, 1136, 1109], "category": "Text", "text": "The Action is part of the **TEI Building Back Better through Green Jobs' Creation**, complementing ongoing initiatives by the EU, Germany (e.g. strengthening climate adaption and resilience, including energy efficiency), France (e.g. EU blending support to AfD support to water management in Punjab) and Italy (agricultural value chains). While the existing EU *International Labour and Environmental Standards (ILES) Application in Pakistan's SMEs* project and the German funded GIZ-project *Promotion Employment through Women Empowerment in Pakistan's Textile Industry (WE)* also focus on the human and labour rights aspects, the approach of the planned Action is mainly centred around the green transition, including reduction of GHG emissions, reduce negative environmental impacts and improve compliance, with labour issues being addressed mainly indirectly. Supporting the improvement of the business environment in the country through; the greening of SMEs and the facilitation of local public-private dialogues with the aim to prepare financing of local infrastructure projects, also **contributes to the Global Gateway Strategy including its 360 approach**. The action could also demonstrate synergy with the EU SWITCH to Circular Value Chain project, which cooperates with EU MNCs on promoting CE in their global value chains, including a component on textiles."}, {"bbox": [85, 1148, 341, 1180], "category": "Section-header", "text": "## 2.2 Problem Analysis"}, {"bbox": [96, 1194, 1136, 1354], "category": "Text", "text": "**Pakistan's key challenges** to boost its ailing economy, enhance trade with the EU and to green its production are i) absence of a stable, predictable and transparent regulatory framework that provides a conducive environment for SMEs, ii) limited technical and financial knowledge/awareness of SMEs to invest in greening and innovation of their production, iii) limited access to sustainable finance (especially for women and people from underserved groups such as people with disabilities), iv) limited local public-private dialogues to facilitate necessary local investments in sustainable infrastructure, and v) limited women inclusion."}, {"bbox": [96, 1379, 1136, 1461], "category": "Text", "text": "Reforming private sector regulation at all levels and balancing the country's systematic trade deficit are overarching priorities for the country to escape the cyclical macroeconomic crises and reduce dependence on IMF programmes to ensure sustainable, inclusive growth."}, {"bbox": [96, 1485, 1136, 1621], "category": "Text", "text": "**Weak business-enabling environment:** In Pakistan, key national policy documents such as Vision 2025, Strategic Trade Policy Framework (STPF) 2020-25, National SME Policy 2021, and the economic roadmap agenda under the Special Investment Facilitation Council (SIFC) emphasise the need to address climate change. The 5Es Framework published by the Ministry of Planning, Development, and Special Initiatives (MOPDSI) also underscores the importance of exports, environmental protection, and combating climate change, while"}, {"bbox": [1037, 1681, 1143, 1707], "category": "Page-footer", "text": "Page 6 of 31"}]