The All Pakistan Business Forum has asked the government to take concrete steps to keep industrial wheels running especially of SMEs, saving the livelihood of millions of workers associated with the small industries.
APBF President Syed Maaz Mahmood said that with a view to save the economy from the impacts of the slowdown due to the COVID-19 the government should announce special incentives for a cash-strapped Small and Medium Industry, which represents more than 90 percent of around 3.2 million business enterprises in Pakistan, contributing 40 percent to the GDP, employing more than 80 percent of non-agricultural workforce, and generating 25 percent of export earnings.
“Mere the statements will not work unless solid measures are taken by the government including sizeable reduction in fuel prices, major cut in key policy rate, regionally competitive energy rates, quick refunds payment and relaxation in duties & taxes.”
He said that Pakistan’s SMEs are facing declining demand in overseas markets and facing problems in executing existing orders but real problem is the high cost of production and a long list of duties and taxes. The government should give priority to the SME sector, by reducing its taxes to strengthen overall economic growth in the country.
He said that presently industrial production has slowed down and wheels of industry have come to halt. If the situation prolongs, there will be unmanageable level of unemployment, he warned. He proposed the government to suspend sales tax collection from the local industry, restoring zero rating status to the export sector to avoid liquidity crunch in this time of crisis.
He said other countries are combating the situation through massive injection of funds through outright grants, ensuring availability of cheap credit to the industry and deferment of all government dues and taxes. He urged the government to ensure continuation of electricity and gas supply to the industrial sector at low rates on long-term basis and slash the interest rate to single digit with a view to achieve export target.
He criticized that the reduction of just 0.75 percent in interest rates was a joke and beyond the understanding of the business community as many countries all around the world have reduced their interest rates and even gone to zero.
He expressed his concern for not passing on full relief to the public of oil price cut in the global market, which has dropped by more than 30%, as WTI crude has been reduced to below the $28/bbl, while Brent crude also plummeted to around $32/bbl.
It is unfortunate that the government instead of providing full relief to the consumers increased GST and petroleum levy on petrol and HSD.
He expressed serious concern over a rate of just 7 percent of private-sector credit for the Small and Medium Enterprises (SMEs) in Pakistan, recommending the State Bank of Pakistan to take regulatory measures to facilitate the sector.
He observed that private lending to the SMEs was not encouraging and the SBP needs to take regulatory measures as major chunk of the credit goes to the government effortlessly as well as where no risks are involved.
He ensured that the APBF would continue to play its outstanding role at this testing time and support the state machinery to check the coronavirus. He said that government is already doing well and epidemic is well in control because of appreciable steps of the government but still a lot of work has to be done to avert its spread.
