‘Top brass must put national priorities in order’: PKR freefall and high inflation jeopardize our future: KCCI chief

KARACHI: Karachi Chamber of Commerce & Industry (KCCI) President Muhammad Idrees, while highlighting the impact of unstoppable depreciation of Pakistani rupee against the dollar and all-time high inflation, warned that unsettled economic issues would severely jeopardize Pakistan’s future and the country may soon reach at the point of no return, hence the top brass must get the national priorities in order and fix the ailing economy in a more sustainable manner.

The President KCCI pointed out that since January 2022, Pakistani rupee has lost around 35 percent of its value against USD which stood at Rs178.50 on January 1 and was currently hovering at above Rs240, depicting a very dreary picture of the economy and having a devastating impact on the industrial performance because of high cost of doing business and the inflation.

“The miseries and hardships aggravate further for the industry as well as the public when they, in addition to somehow digesting the impact of rising dollar and subsequent inflation, have to pay the record high electricity bills which are totally unaffordable for the public and un-absorbable for the industries”, he said, adding that this has led to closure of a large number of Small & Medium Enterprises (SMEs) and raised unemployment.

He noted that in the month of August 2022 alone, Pakistan witnessed a year-on-year CPI inflation of 27.3 percent which was too high whereas in the first two months of current fiscal year, i.e., July and August, exports stood at $4.7 billion only against the imports of $11.06 billion.

“However, the revenue collection witnessed a surge despite a drop in imports but it simply cannot be considered as an achievement as it happened purely because of steep devaluation of Pakistani rupee”, Muhammad Idrees said and informed that collection of Customs duty recorded an increase of 3 percent or Rs2 billion despite a decline of 10 percent in imports in July 2022 as compared with July 2021.

He further mentioned that the impact of ban on Luxury, Non-Essential, Machinery (HS 84 & 85) and Raw Materials was clearly visible in the imports of July 2022 when a downfall of 37 percent was recorded on month-on-month basis and on Year-on-Year basis, the imports fell by 10 percent. However, Pakistan’s imports surged to around $6 billion in August 2022, depicting an increase of 21 percent as compared to July 2022.

“In my view, it was all a disasters exercise to hinder trade by imposing ban even on raw materials and machineries which only created trouble for the business and industrial community as KCCI was constantly receiving complaints from importers whose consignments were not being cleared due to State Bank’s restrictions to take prior approvals for clearance of consignments from Ports which terribly delayed the process and caused heavy losses to importers on account of additional demurrages and detention charges. The State Bank’s hindrances in import of pulses and other agricultural commodities was a very serious issue which poses threat to food security particularly when the country’s agricultural sector has been completely devastated by rainfalls and flashfloods. Hence, SBP’s practical steps would plunge the economy into further devastation”, he added.

He warned that the record high cost of doing business, rapidly rising cost of living, dwindling foreign exchange reserves, devaluating Pakistani rupee, destruction caused by floods and the outbreak of epidemics in the country have created a very challenging situation for Pakistan and it was a matter of grave concerns that the all the issues were not showing any signs of much improvement in near future.

“Therefore, the policymakers must act sensibility, review the entire scenario on war-footing basis and quickly come-up with a practical plan of action to bring down the cost of doing business as well as the cost of living otherwise, the crises would may push Pakistan’s economy to a point of no return and may even trigger anarchy all over the country because of rising unemployment and poverty,” Muhammad Idrees said, “Our nation recently surpassed its 75th Independence Day but unfortunately our economy during all these years has never been able to maintain its direction mainly because of changing policies and ad hoc arrangements. Our age-old statements pertaining to tough economic times have sadly become a constant reality. As a nation we must evaluate our approach to the economy and realize that things need to change.”

Copyright Business Recorder, 2022