LAHORE: The Pakistan Hosiery Manufacturers and Exporters Association (PHMA) has lashed out at the government for increasing prices of petroleum products, in an extraordinary and unexpected move by up to 66 percent, which would lead to increasing cost of production and cost of doing business as well.

PHMA vice chairman Shafiq Butt, in a statement issued here on Saturday, said that the high cost of doing business is already hindering Pakistan in achieving its export target. However, he appreciated the State Bank of Pakistan's decision to lower the discount rate by 100 basis points, bringing it to 7 percent, which will spur the economic activity slowed down by the coronavirus outbreak. He observed that a cumulative reduction of more than 6 percent in interest rate in just few months would cut cost of production, strengthen debt repayment ability and improve the credit worthiness but the latest move of hiking oil rates unprecedented will washed up the whole benefit provided to the industry, he added.

He said that SBP positive move would minimise the impact of the coronavirus on growth and employment by easing borrowing costs and the debt service burden of households and firms, maintaining financial stability. But the decision of Finance division of increasing the oil prices would damage the business and industry.

"PHMA welcomes SBP's decision of fourth cut since March 17, 2020 when the rate was 13.25 percent, which will definitely stimulate economic activity, as the interest rate has declined by 6.25 percent during this period; he said and added that the authorities at the same time had withdrawn this relief by throwing a patrol bomb on the trade and industry."

Shafiq Butt said that the cost of doing business and cost of production have shot up to the level of un-competitiveness. The cost of borrowing was huge and capital financing has become more expensive. He said that the government instead of taking action against oil marketing companies for not providing the POL products at lower prices totally surrendered before the cartel and increased the prices four days before the end of the month apparently to appease OMCs.

Copyright Business Recorder, 2020