In 2012, a book came out that reframed international thinking on development, Why Nations Fail, by Daron Acemoglu and James Robinson, challenged decades of received wisdom, in insisting that prosperity is shaped less by geography, culture, or natural resources and more by the strength and quality of a country’s institutions. They were awarded the Nobel Prize for Economics in 2024, along with Robinson and Imon Johnso im2024. Nations rise when they build systems that create fairness, transparency, and accountability – and they fall when institutions are weak, absent, or captured by vested interests.
Despite Pakistan’s overall slow economic growth over the past two decades, two sectors have seen much faster expansion, but without having their own regulators. The beauty and personal-care industry and the real estate sector have attracted substantial private investment and generated employment at scale. On one hand, Pakistani beauty products are increasingly finding their way into export markets; on the other, real estate has emerged as a major destination for overseas Pakistani investment. Without a proper national-lee regulatory body, these markets continue to operate with little protection for consumers and an unfair playing field for companies.
Take the example of real estate. The sector contributed an estimated two to three percent of GDP in 2024. Beyond its direct share, real estate has a significant influence on the broader macroeconomic environment. Activity in the sector has a strong influence on demand across a wide range of upstream and downstream industries, which generates a multiplier effect throughout the economy. Estimates suggest that real estate and construction are linked to 30 to 40 allied industries – including cement, ceramics, paint, steel, glass, and various building materials, as well as services like architecture, engineering, and finance- making it one of the most interconnected and economically consequential sectors in the country.
Real estate remains one of the mainstays of domestic investment and overseas remittances. Overseas remittances in Pakistan stand at nearly $30 billion per year, out of which approximately 21.7 percent are spent on buying homes and plots. For most buyers – in particular, middle-class families – investing in property is usually a long-term asset, often involving their lifetime savings. Given its central role in household investment, real estate is particularly sensitive to governance gaps, as high-value and irreversible transactions, combined with information gaps and uneven oversight, expose households- particularly middle-income families – to delays, deceptive practices, and fraud with limited avenues for timely redress.
At the heart of these challenges lies a regulatory vacuum. Despite being one of the most vital sectors of the economy, the real estate market of Pakistan remains unregulated, with no specific national-level authority that provides oversight for market conduct, project approvals, and consumer protection. The existing regulatory framework is scattered among various provincial and municipal development authorities. For instance, Islamabad comes under the Capital Development Authority (CDA), Lahore under the Lahore Development Authority (LDA), and Karachi under the Sindh Building Control Authority (SBCA)=- all performing under disconnected legal and institutional frameworks that do not establish accountability among developers, protect consumer interests, or impose standardized practices across different regions. Although the federal government has already taken a positive initiative in the shape of the Islamabad Real Estate (Regulation and Development) Act 2020 for the capital territory, its implementation is still in the early stages. Effective regulation and oversight will ultimately require the establishment of a national Real Estate Regulatory Authority, complemented by corresponding provincial authorities, following the successful models adopted in India and Dubai.
The beauty and personal care (BPC) industry is another major sector that has historically grown and thrived without direct regulatory oversight. A 2023 report by the Zero Mercury Working Group states that Pakistanis spend an average of Rs 101 billion annually on personal care products. According to a report by Euromonitor, the market size of this sector almost doubled over six years, rising from Rs 173.8 billion in 2017 to Rs 341.4 billion in 2022. These figures likely underrepresent the industry’s true scale, given that a large portion of activities in this sector occur in the informal economy. During a podcast in September 2025 by the Sustainable Development Policy Institute (SDPI), beauty industry leader Ms Mussarat Jabeen noted that despite rapid growth, Pakistan lacks an official body to register beauty parlours. She compared this to the UAE, where beauty services must comply with established health, safety, and environmental standards. She also pointed out that while around 1,800 cosmetic creams are officially registered in Pakistan, the extent of unregistered products remains unknown.
The Competition Commission of Pakistan, is currently filling the gap through the launching of investigations into deceptive marketing practices in the beauty and real estate sectors, using its authority under Section 10 of the Competition Act. However, sustained efforts from the PGCRA in the beauty industry and the formation of RERA for real estate are crucial to ensure long-term consumer safety, healthier competition, and market accountability across both sectors. In the absence of sectoral regulation, competition law alone can only address symptoms rather than the structural causes of market failure.
Despite this expansion, regulatory oversight has lagged behind. Concerns have been voiced for years about the safety and quality of both locally produced and imported beauty items, especially after repeated international warnings over high mercury levels in certain skin-whitening creams. In the absence of a dedicated regulator, responsibility has been shared across different bodies. The Drug Regulatory Authority of Pakistan (DRAP), created under the 2012 DRAP Act, only regulates medicated cosmetics. Many beauty items fall outside its domain due to ambiguous ingredient lists and misleading marketing that presents medicated products as regular beauty creams. The Pakistan Standards and Quality Control Authority (PSQCA) has issued standards for some products, but the enforcement is a continuous challenge.
A significant step forward came in July 2023 with the passage of the Pakistan General Cosmetics Act, 2023. This law proposes the creation of the Pakistan General Cosmetics Regulatory Authority (PGCRA) under the Ministry of Science and Technology. The Authority will be responsible for regulating product quality, labeling, packaging, manufacturing, and storage. However, despite this legislative progress, the PGCRA has not yet become operational, and no enforcement actions have been reported. Until the Authority is fully functional and capable of regulating the market, the sector will continue to struggle with regulatory gaps, inadequate consumer protection, and product safety risks.
The Competition Commission of Pakistan, is currently filling the gap through the launching of investigations into deceptive marketing practices in the beauty and real estate sectors, using its authority under Section 10 of the Competition Act. However, sustained efforts from the PGCRA in the beauty industry and the formation of RERA for real estate are crucial to ensure long-term consumer safety, healthier competition, and market accountability across both sectors. In the absence of sectoral regulation, competition law alone can only address symptoms rather than the structural causes of market failure.
