Ayesha Mudassar

Worried over the deteriorating economy, business leaders and industrialists have informed a parliamentary panel that the rising cost of doing business has affected the performance of the industrial sector and this might prevent Pakistan from competing in the international market. Chairman of Businessmen Group (BMG) Zubair Motiwalla, and President of Karachi Chamber of Commerce and Industry (KCCI) Muhammad Tariq Yusuf told the Senate Standing Committee on Finance and Revenue that rising interest rates, soaring inflation and massive currency devaluation were eroding purchasing power and making industries less competitive, WealthPK reports.

Pakistan has the highest interest rate in the region at 21% compared to Malaysia’s 3%, India’s 4% and Bangladesh's 6%. To reduce the cost of doing business, the business community emphasised the need to align Pakistan's interest rates with regional economies and reduce input costs to promote industrialisation. The country’s inflation rate has reached a record high, making it Asia’s fastest for a second month. It was recorded at 36.4% on a year-on-year (YoY) basis in April 2023 compared to 35.4% during the previous month, according to the Monthly Economic Update and Outlook for May 2023 issued by the Ministry of Finance.

The Pakistani rupee, which was valued at Rs199.5 against the US dollar in May 2022, ended May 2023 at Rs285.8, posting a depreciation of 43%. During the launch ceremony of ‘study of existing income tax regime for SMEs’, Kashif Anwar, President of Lahore Chamber of Commerce and Industry (LCCI), said the decision to restrict the import of inputs to save dollars had adversely affected the industrial output.

Large-Scale Manufacturing (LSM) – a key indicator of industrial activity – declined 8.11% during July-March 2022-23 compared with the same period of last year. The LSM output plunged by 25% in March 2023 when compared with March 2022 and 9.09% when compared with February 2023. The Pakistan Business Council (PBC), representing the country’s 100 largest manufacturers, highlights super tax as a huge penalty on the well-organised documented sector as it has increased their costs.

Credit: Independent News Pakistan-WealthPk