The Pakistan Industrial and Traders Association Front (PIAF) claimed that the government's tight import regulations and high cost of doing business have "nearly halted" industrial production. PIAF Chairman Faheem ur Rehman Saigol, in a statement released jointly with PIAF Senior Vice Chairman Nasrullah Mughal and Vice Chairman Tahir Manzoor, noted that ongoing rises in fuel prices and energy tariffs have raised the cost of manufacturing.

A relaxation of some import restrictions related to HS Code Chapters 84 and 85 and a few items in Chapter 87 was announced by the State Bank of Pakistan (SBP), but little has actually changed as trade and industry continue to experience difficulties with both imports and export shipment proceeds. The big industries need a supply chain constantly to run the entire economy, he added.

Faheem claimed that Pakistan needs to increase exports, for which many export-oriented industries need to import raw materials and intermediate goods to produce the finished products. Therefore, the SBP should further relax import restrictions and adopt a more lenient import policy, he said.

The SBP's decision had a detrimental impact on the pharmaceutical, automotive, plastic, mobile phone, engineering, and textile industries. The most worried industries are those whose shipments have arrived at the port and whose suppliers are asking them to pay the bill, but the banks are still putting up obstacles at the SBP's request, he added. Despite having the money, importers are unable to transfer it to suppliers, and Cash Against Document importers believe their clients are losing patience with them since they are unable to make payments on time, the PIAF chairman said.

He claimed the collection at the import stage contributed almost 50% of the total revenue collection. However, the country's tax collection is being severely harmed by the policy of restricted imports, since the loss in income collected at the import stage has nearly reached over Rs 50 billion per month, he said.

The PIAF chairman said the contractionary policy will have a greater impact on tax collection in the upcoming months if imports are not further relaxed. He asked the SBP to consider the country's trade and industry, including the PIAF, in order to make further relaxations in imports so that business activities could thrive and exports could be enhanced to further boost the country's inadequate foreign exchange reserves.

The current account deficit decreased by more than half to $3 billion in the first five months of the current fiscal year 2022-23 compared to $7 billion in the same period. According to the PIAF chairman, the lack of letters of credit (LCs) is destroying industrial activity and causing a large increase in unemployment since businesses are unable to acquire the raw materials required to keep their production machinery in motion.

Additionally, he expressed his deep concern over the severe gas crisis, saying that these new developments have had a profound impact on exports and industrial activities, which will have a catastrophic effect on the already fragile economy and the lives of millions of low-income people due to massive layoffs. He questioned how long an entrepreneur can continue to pay salaries and wages to the majority of the idle workers if he is unable to produce at full capacity.

According to him, the reserves have dropped to a four-year low of $6.2 billion, heightening the possibility of missed international payments and missed repayments of foreign debt. He said that a 32% decrease in imports was the main factor in the current account deficit declining to a 19-month low. He said there was a 13% and 14% decline in exports and remittances, respectively, and the government must allow the interbank exchange rate to reflect the demand for dollars. According to him, this strategy will lessen dollar hoarding in the kerb market.

Credit : Independent News Pakistan-WealthPk