PESHAWAR: Residents of Malakand Division and merged tribal districts, especially the business community, are facing severe economic difficulties, unemployment and business stagnation, complain leading business leaders.
In a joint statement issued here on Saturday, president of the Swat Chamber of Commerce and Industry Noor Mohammad Khan, president of Trade Union Malakand Division Abdul Rahim Khan, president of the Mohmand Chamber of Commerce and Industry Amir Mohammad Khan, president of the Bajaur Chamber of Commerce Haji Lal Shah, president of Chitral Chamber of Commerce Mehboob Azam, president of Malakand Chamber of Commerce Inamullah and business leader Khalid Khan Afridi said the special constitutional status of Fata and Pata had been abolished and both regions were merged with Khyber Pakhtunkhwa, but the promises made by the federal government at the time of merger had not been fulfilled.
They added that economic activities in those regions were badly affected, while disappointment among residents was growing.
The business leaders said that Swat had a unique place in the world due to its natural beauty, high snow-capped mountains, dense forests, springs, rivers and tourist destinations, while the residents were hospitable and hardworking and had always played an important role in the development of different sectors, especially trade, industry and tourism.
Demand tax relief, practical steps for economic recovery, business stability
They said after the state of Swat was voluntarily acceded to Pakistan in 1967-68, the region was granted several special privileges, including tax-free status, which boosted industry and trade in the region, created employment opportunities and stabilised the local economy.
The business leaders said that people of merged tribal districts and ex-Pata had made immense sacrifices in the war against terrorism in the form of lives, while business, industry and tourism sectors were badly affected.
They said that the process of merging Fata and Pata with Khyber Pakhtunkhwa was completed in 2018.
The business leaders added that in such circumstances, it was promised by the government at the time of merger that Fata would be given special privileges and tax exemption for 10 years to strengthen the residents economically. They complained that those promises hadn’t been fulfilled.
The business leaders also noted that the sales tax imposed on imported raw materials and machinery in ex-Fata/Pata had caused serious damage to local industries.
They regretted that several factories in the region were on the verge of closure while investors were avoiding putting money there.
According to them, there has been a significant decline in imports and if this situation continues, not only will industry and trade be destroyed but unemployment, poverty and law and order problems could also become serious. Also, the tourism sector, which is the backbone of the regional economy, will be badly affected.
The business representatives of Malakand and merged districts demanded that the federal government take immediate practical steps for economic recovery and business stability of the people of these areas.
They said according to Entry 89 of the Eighth Schedule of the Sales Tax Act, 1990, the sales tax rate on imports of raw materials and machinery should be reduced from 10pc to 4pc, while 4pc sales tax should be imposed on supplies within merged district instead of 10pc so that local industries could get support.
The business leaders said there had been a demand for exemption from income tax under Section 145-A of Part One of the Second Schedule of the Income Tax Ordinance, 2001, retention of the minimum tax exemption under Section 113 and extension of the period of sections 109A and 110.
They said that the 2025-26 budget imposed a 10 per cent sales tax on ex-Pata, which led to an 80 per cent reduction in imports and a huge increase in unemployment, which negatively affected the economy of the region, as well as local transport and businesses.
The business leaders demanded that sales tax be reduced from 10 per cent to four per cent and that the income tax exemption granted until 2029 be further extended.
They also called for the abolition of “further tax” imposed on supplies to unregistered individuals, saying it is severely affecting business activities.
Published in Dawn, May 24th, 2026