ISLAMABAD, April 21: The government has decided to help reduce the cost of doing business in Pakistan, and, as a first step, banks were being asked to offer loans to "credible investors" at an average interest rate of up to 2 per cent.

Official sources told Dawn here on Wednesday that an average lending rate by the banks have come down from 18 per cent to 5 per cent which would now be available at an average 2 per cent to credible investors.

Since the banks were maintaining huge liquidity, the sources said, this lending could be available even at 1.5 per cent interest rate and that the purpose was to greatly facilitate the investors.

"The government cannot dictate banks to offer loans on reduced interest rates but we are requesting them to do this to help achieve greater industrialization in the country," a source said.

However, the private sector investors have been told by the government to improve their productivity, technology, efficiency and to adopt international standard practices with a view to reducing the cost of doing business in the country.

The sources said that matters pertaining to power rates for commercial users were currently being "actively examined" which were likely to be reduced shortly. "We know that the recommendations of the National Electric Power Regulatory Authority (Nepra) had not been implemented so far to reduce power rates for industrial and commercial consumers," a source said.

He said: "but we are at it and are making sure that power rates are cut for the industrial and commercial consumers in the new budget or before that." The sources said that focus was on greatly helping the construction and housing industry.

Since the State Bank has separated prudential regulations for Small and Medium Enterprises a month ago, it has become easy for the SMEs to get loan on reduced mark up from the banks.

For the SME sector, the sources said, special instructions had been issued to SME Bank and other micro banks to lend generously and that too on further reduced interest rate.

Besides, the government was also working to remove congestion at ports by having clearance of goods maximum in two days rather than 15/16 days as wascurrently witnessed. Similarly, customs clearance at ports was being expedited for which the port authorities have been directed to provide modern equipment, new gadgetry and easing of procedural and labour laws.

Large scale manufacturing has registered over 15 per cent growth during the first eight months of the current financial year. "And this happened due to stretching of utilization capacities of the industries from 65 per cent to roughly 90 per cent and in some case 100 per cent," another source said.

He was of the belief that with the banks interest rates further coming down and power rates cut, the cost of doing business in Pakistan will considerably reduce.