LAHORE: The Federation of Pakistan Chambers of Commerce and Industry’s Businessmen Panel (BMP) has asked the government to announce soft financing with very low interest rate and without any collateral for SMEs with a view to spur the economic growth in the country.
The FPCCI former president and BMP Chairman Mian Anjum Nisar, in a meeting of trade and industry representatives, stated that the constant increase in power tariffs on the pretext of fuel adjustment had increased electricity prices and added to the already high cost of trade and industry. Seeking comparable energy tariffs for domestic industries in order to capture the global market, he stated that due to high electricity rates, power theft became rampant as the tariff was unaffordable to consumers.
The meeting forwarded several recommendations so that the small industry could deal with the challenges posed by the present economic crisis, saying mere statements would not work unless solid measures are taken by the government, including a sizable reduction in fuel prices, bringing down key policy rate to single digit, regionally competitive energy rates and substantial cut in duties and taxes.
It is unfortunate that the State Bank has several times introduced a financing scheme for Small and Medium Enterprises, enabling them to get loans without collateral but it was never implemented in its true spirit.
The scheme was launched to improve the SMEs’ access to finances in collaboration with the government and aimed at enabling businesses that cannot offer security or collateral to access bank finance.
The BMP and PIAF meeting was held here to deliberate the government economic policies and called for concrete steps to keep industrial wheels running, especially for SMEs, saving the livelihood of millions of workers associated with the small and medium industries.
The BMP Chairman urged the central bank to announce a soft loan with a minimum markup rate, especially for SMEs to bail out their struggling businesses.
The Businessmen Panel called for significant cuts in import duties and waiver of sales tax, income tax, and additional income taxes, which are still being charged in this time of grave crisis.
Mian Anjum Nisar asked the government to take concrete steps to keep the industrial wheels running especially for SMEs, to save the livelihood of millions of workers associated with the small industries.
He said that to save the economy from the impacts of the slow growth, the government should announce special incentives for a cash-strapped small and medium industry, which represents more than 90% of around 3.2 million business enterprises in Pakistan, contributing 40% to GDP, employing more than 80% of non-agricultural workforce, and generating 25% of export earnings.
The BMP Chairman Anjum Nisar stated that providing affordable electricity would assist in lowering production costs, thereby benefiting the public. He stated that rising imports and a widening trade deficit posed a serious threat to economic growth and must be addressed urgently.
He said that with continuous hike in cost of production in the country, what the Pakistan’s economy really needs is persistent and sound economic management, asking the authorities for undertaking economic reforms and improving the regulatory environment for better Ease of Doing Business level to boost foreign investment so that financial stability can be achieved in the long-run.
The BMP chief urged the power ministry to identify system constraints and communicate targets to all concerned departments in order to launch a wartime effort to upgrade the transmission system.
The FPCCI former president said that we should keep our focus on support for cash flow management for the SME sector and the government may prioritize its incentive preferences under the growth and importance for the economy. He suggested that the authorities should reduce sales tax to at least 10% to improve demand generation, besides announcing interest-free loans to pay employees’ salaries.
Mian Anjum Nisar alleged all previous governments for extensive borrowing of forex during last five years to meet local expenditure, which had increased the burden of foreign debt of Pakistan substantially, instead of making serious efforts to enhance the ranking of Ease of Doing Business Index of Pakistan, as it is must to attract foreign as well as local investment and high economic growth.
He stressed the need for reducing cost of doing business, besides evolving a new price control mechanism, as huge taxation, rising oil prices and constant jump in electricity and gas tariffs have lifted the inflation to decades high level.
The BMP chief warned the authorities that high inflation can hurt economic growth and a careful policy is required to keep it in control. He said that the pace of inflation is skyrocketing at a time when the economic activity is slowing down.
As the oil prices have been increased and power tariff has gone up further, the chairman stated that the government has dropped a fuel bomb on the businessmen after it suffered an electric shock to meet the conditions of IMF for the revival of the stalled loan program- a recipe to shake the trade and industry.
Copyright Business Recorder, 2024
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