KARACHI: Worried by the downward trajectory of the country’s economy, business leaders and captains of industry have warned that the rising costs of doing business could render Pakistan unable to compete with other countries in the region.
They term rising interest rates, the uncertain situation of the US dollar, sky-rocketing fuel prices, higher gas and power tariffs, and — perhaps worst of all — unabated food inflation were extremely serious issues that needed to be addressed by the government on a priority basis.
Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Irfan Iqbal Sheikh told Dawn that the cost of production of various local goods has risen by around 15 per cent in the last one-and-a-half-months alone.
“The rising cost of doing business haunts the business community right now,” he said, adding that the cushion provided by the arrival of foreign exchange from the International Monetary Fund (IMF) and China were merely temporary solutions rather than a permanent fix for current economic issues.
Business and industry leaders fear country won’t be able to compete with regional players, like India, Bangladesh, etc
In the FPCCI president’s view, it would be hard to compete with far-eastern countries, India, Bangladesh and China in the presence of high interest rates, a vulnerable exchange rate, and astronomical gas and power tariffs.
Pakistan has the highest interest rate in the region at 13.75pc, compared to Malaysia’s at two per cent, China’s 3.85pc, India’s four per cent and Bangladesh’s at five per cent.
“I anticipate a drop in exports as manufacturers are facing tremendous problems in handling the rising cost of production,” he said, urging the government to take stakeholders on board and chalk out strategies to bring these costs down.
He called on the government to rescue trade and industry rather than “wasting energy on political issues”.
“We trying to meet the Prime Minister and Finance Minister next week to raise these issues,” he told Dawn, adding that they would lobby the government to shift focus towards alternate sources of energy such as solar and wind to bring down the massive import fuel bill.
Similarly, Karachi Chamber of Commerce and Industry (KCCI) President Mohammad Idress and Businessmen Group (BMG) Chairman Zubair Motiwalla were unanimous in their views; the fact that inflation has soared to 21.32pc in June is quite alarming.
Both leaders claimed it was the business and industrial community that was bearing the brunt of the high cost of doing business and sought immediate action from the government to save the economy from adverse impacts of record inflation, which was eroding the purchasing power of the people and rendering industries uncompetitive.
On the food front, Karachi Wholesalers Grocers Association (KWGA) Patron Anis Majeed told Dawn that wholesale rates of pulses had risen by an average Rs20 per kg in the last month-and-a-half due to rising transportation costs and devaluation of the rupee against the dollar.
However, retailers do not have any barriers to pricing and they can grab maximum profits, he said.
On Saturday, the North Karachi Association of Trade and Industry (NKATI) has said that the Karachi chambers had appealed to Prime Minister Shehbaz Sharif to take notice of the lack of gas supply to industries.
In their SOS, they called for the PM’s “immediate intervention” to save the industries of Karachi from collapse owing to a lack of gas supply in Sindh.
Published in Dawn, July 3rd, 2022