THE private sector in Khyber Pakhtunkhwa is pressing the government to accept its pre-budget demands for facilitating industrial investment and help revive closed down industries.

The demands are few but focused on specific issues to improve productivity and industrial competitiveness.

Some 1000 of the 2000 small and large manufacturing units have ceased operation because of poor law and order situation while the rest are struggling with a host of problems like high freight charges, liquidity crunch and power shortages.

Proposals sent by the Khyber Pakhtunkhwa Chamber of Commerce and Industry to the federal finance ministry are focused on the revival of the militancy-hit industry and businesses in the province.

The chamber has pointed out that under the 18th Amendment, the federal government is bound to ensure uninterrupted supply of gas and electricity to industries in the provinces. SCCI president Afan Aziz laments that the province producing electricity at Rs3 per unit is buying it at three times higher rates.

This has rendered the industry uncompetitive.

The chamber has also suggested an increase in internal rate of return on hydropower projects to encourage electricity generation from water resources instead of thermal power generation. It has also proposed levy of a specific cess or tax on goods imported under Afghan Transit Trade Agreement for using the amount thus collected on damaged road infrastructure in the province.

The chamber also wants effective collection of tax on farm income and extension of general sales tax on more services in the province.

The income tax revenue in the province is negligible.

Mr Afan said businessmen were still facing a lot of challenges and difficulties due to prolonged militancy and insurgency in the province and demanded the extension of the Prime Minister’s Fiscal Relief Package for another two to three years. This was a major demand of the province for the upcoming federal budget.

Aside from this, the private sector is facing credit liquidity crunch, with commercial banks shy to lend money. Mohsin Aziz, a Peshawar-based industrialist and president of All Pakistan Textile Mills Association says the share of Khyber Pakhtunkhwa in countrywide bank lending is less than 1.7 per cent.

“In fact, the banks have declared the province a red zone. No bank is willing to provide credit either for running the existing projects or setting up of new industries in the province,” Mr Aziz complained.

Another problem facing the businessmen are the high freight rates. Since the province has to import everything through Karachi ports, the businessmen are constantly hurt

by frequent increase in petrol and diesel prices, doubling of the freight charges etc. resulting in higher cost of production as compared to the other provinces.

Even those units using the indigenous raw materials are no more competitive.

The KP chamber has also proposed cutting down of customs duty on all smuggling prone items including tea and auto parts, to generate more revenue as well as to reduce their smuggling.

With the prevailing adverse business environment, entrepreneurs feel that there is no scope for industrialisation in the province.—Mubarak Zeb Khan