Policy changes proposed to revive the economy

Business leaders are urging the government to engage with the community ahead of the upcoming budget


Prominent businessmen and industry leaders have proposed essential policy changes to revitalize Pakistan’s economy, stressing the upcoming budget for fiscal year 2023-2024 as a golden opportunity to foster growth, innovation and sustainable development in various sectors.

Finance Minister Ishaq Dar, President of FPCCI Irfan Iqbal Shaikh met a delegation of Federation of Pakistan Chamber of Commerce and Industry (FPCCI) and highlighted the importance of the upcoming Union Budget. Shaikh emphasized the need for the government and the business community to collaborate and introduce measures and policies that would facilitate industrial growth, explore import alternatives and revive struggling units through targeted financial measures.

The Pakistan Business Forum (PBF) has called on the government to implement effective economic measures, including the upcoming federal budget, to encourage business activity in the country while promoting austerity measures in the public sector.

Speaking to The Express Tribune, PPF President Mian M Usman Zulfikar emphasized on establishing export warehouses along the borders to boost trade with neighboring countries. For a more inclusive economy, the panelists suggested bringing agriculture and service sectors into the tax net.

To achieve 6% GDP growth in the next financial year, the budget makers have insisted on reducing tax rates, widening the tax base and reducing the shadow economy. These measures are necessary to provide competitiveness to Pakistan’s products in global markets.

In view of non-availability and dwindling inflow of foreign exchange, Karachi Chamber of Commerce and Industry (KCCI) Chairman Muhammad Tariq Yousuf proposed to allow importers to remit or remit foreign exchange through their own sources outside Pakistan. Yusuf further suggested that importers should obtain their import documents directly from suppliers, avoiding the involvement of domestic commercial banks. He criticized commercial banks for favoring US dollars and clients with high volumes of trade while ignoring small and medium enterprises (SMEs).

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Yusuf also stressed the need to curb direct financing of importers for raw materials, essential goods and machinery. He insisted on extensive consultation with stakeholders to expand the definition of essential commodities set by the State Bank of Pakistan (SBP), as many key commodities are currently excluded, leading to delays in opening Letters of Credit (LCs). Import of luxury goods should not be allowed under self financing arrangements. Yusuf proposed to limit imports to US$10,000 per month for registered importers through registered bank agreements.

The PBF chairman highlighted the country’s historical GDP growth, pointing out that Pakistan has achieved 5% growth only three times in the last three decades. He emphasized the untapped potential of information technology and its potential to increase industrial productivity. Zulfiqar estimates that Pakistan’s digital financial potential will reach $36 billion over the next four years, providing a seven percent boost to GDP and creating four million new jobs.

Meanwhile, the FPCCI chairman stressed the importance of the textile sector, which accounts for nearly two-thirds of Pakistan’s exports, amounting to $19.3 billion in FY22. Sheikh called for measures to ensure sustainable supply of cotton, the sector’s primary raw material, by promoting cotton cultivation. He stressed the need for access to finance as capital is essential for the smooth functioning and expansion of the industry.

Also, Shaikh advocated for subsidized and affordable export financing for plant machinery in sectors such as leather, surgical equipment, sports goods, pharmaceuticals, and SMEs. He proposed the full implementation of Export Processing Zones, Special Economic Zones and Special Technology Zones with allies like China, South Korea and Malaysia.

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The FPCCI chief called for reforming the Central Board of Revenue (FPR) to play a more conducive role in industrialization. He emphasized the need to tackle corruption, harassment, mismanagement and red tape.

Published in The Express Tribune on May 21St2023.

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