The All Pakistan Business Forum, appreciating government’s various incentives for the industry, has asked the authorities to also announce some tax relief, reducing sales tax ratio and import duties on industrial raw material so that cost of production could be dropped.
APBF President Maaz Mahmood said that the SBP is providing liquidity to banks and Development Finance Institutions for onwards lending to SMEs at discounted rates under different refinance schemes and it is the government responsibility to get it implemented fully.
He said that in the wake of slowdown in global demand due to the novel coronavirus, the State Bank has introduced relaxations for exporters to help alleviate the current crisis. The central bank already offered two lending programmes of Export Finance Schemes and Long-Term Financing Facility to banks worth Rs660 billion for extending cheap credit lines to exporters, which is a good step.
Now the government should take steps to improve the atmosphere of ease of doing business for SMEs, giving them more confidence for smooth production amidst slowdown triggered by the coronavirus fear.
Maaz Mahmood said that it is right step of the central bank for a cut of 150 basis points in the policy rate last month.
However, there is also need for announcing some incentives for the local industry, as steps for exporters cannot be beneficial in present circumstances due to cancellation of orders by the foreign buyers. Presently, the government should support the domestic industry so that demand and supply balance could remain intact in the country.
He said that amidst weaknesses in private capital inflows the Central Bank’s decision to cut a sizeable policy rates will spur growth, infusing confidence in the business community and propel economy which was hostage to the past policy of austerity.
He complained that lending to private sector by the commercial banks has not picked up pace.
He called for supporting the SMEs and credit to the private sector which is sliding, stopping flight of capital, improving tax machinery and curbing speculation of different sectors.
There is no doubt that the SBP has taken new measures because Pakistani exporters are facing problems due to declining demand for their products in the international market and difficulties in executing existing orders due to rapid spread of coronavirus in the global markets. These measures will prevent liquidity problems and exporters will continue their operations, he added.
