Observer Report
Lahore
The Friends of Economic & Business Reforms President Kashif Anwar has stressed the need for bringing down industrial cost of production, which is very high on account of soaring energy tariffs, expansive fuel and constant rupee depreciation along with rising import duties on inputs, making the local production uncompetitive. In a statement issued here Sunday, Kashif Anwar, who is also former vice president of LCCI, asked the government to take concrete steps to attract foreign investment, saving the livelihood of millions of workers associated with various sectors.
He observed that the government will have to make visible reduction in taxes to help revive the businesses in post-corona economic strategy. He said that like the domestic industry Covid-19 crisis has also forced the global investors to put their new investment plans on hold. He said that there is no visible improvement in employment even after the business activities were allowed and countrywide lockdown eased. The small and medium industries —the main providers of jobs are still struggling because of lack of funds and demand. The job losses at the original equipment manufacturers not significant but at auto venders, where bulk of auto-related jobs exist are operating with minimum possible staff.
Kashif Anwar said that the global lockdown imposed to contain the virus badly impacted economic activities, businesses, people’s income and their purchasing power. As a result, the demand for many products, except for food and pharmaceuticals, dropped sharply. The revival of demand for products like cement, textile and chemical would attract foreign investment in future, he said. The financial health of companies around the globe is deteriorating. Many of them are filing for bankruptcy.
The return of stability to the financial health of global firms is a must to attract new foreign investment in Pakistan. He said that with a view to save the economy from the impacts of the slowdown due to the Covid-19 the government should offer out of the box solution for a cash-strapped SMEs, 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.
Expressing dissatisfaction over the financial packages announced so far by the government for industry to deal with the challenges posed by coronavirus, he called for a significant cut in import duties and waiver of sales tax, income tax and additional income taxes which are still being charged in this time of grave crisis. He warned that if smuggling is not checked immediately, the entire industry in general and the emerging industrial sectors in particular will suffer a serious setback. If this policy continues billions of rupees investment in domestic industry will be shattered, he added.
He said that bilateral Trade Agreements such as FTAs and MFNs with countries which have different regulations and protocols, defeat the principle of bilateral trade, as such, our capacity utilization decreases, increasing our cost of production. He asked the government that all impediments which increase the cost such as lower capacity utilization, import duties on inputs and lack of protection against imports need to be addressed for making exports feasible. FTAs particularly with China have given great setback to the local business, especially the industry. The local industry is not competitive in the global market as compared to its regional competitors of India, China and Bangladesh.
