The All Pakistan Textile Mills Association (Aptma) top notch Gohar Ejaz seeks reduction in discount rate by 200bps for growth and job creation ahead. Talking to a select group of media at the Lake City Golf Club on Thursday, the Aptma Group Leader said the regional competitors are charging not more than 7 per cent interest rate, which is yet 9.5 per cent in Pakistan.
There is no expansion to industry and many units are already closed down due to double digit interest rate and unprecedented energy crisis. Gohar said the private sector has been crowded out from the bank borrowing and there were no other sources of funding because the capital market is shallow and the only option left for the industry was equity investment. He said Pakistan's industry was unable to compete with regional textile industry due to huge gap of financial cost of doing business.
Central Chairman Aptma Ahsan Bashir pointed out that in India, industrial finance was entirely met by the central bank and only consumer financing was carried out by private banks, but in Pakistan private banks were dealing in that area as well. Pakistan was following the Western model though its systems and economy was still not mature enough to face market economy challenges, he added.
There was a time when in Indonesia most of the borrowing from the banking sector was made by government. However, the central bank intervened and made it mandatory upon the commercial banks to finance up to 25 per cent of their lending to the corporate sector. This is how, he said, the regulators have to work to ensure industrial growth and create jobs.
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