PIAF demands major cut in markup rate

The Pakistan Industrial and Traders Associations Front has welcomed the State Bank announcement to introduce a scheme with a view to support the employment of workers, urging the central bank to also announce a sizeable cut in discount rate in the face of economic challenges posed by the COVID-19.
PIAF chairman Mian Nauman Kabir, in a joint statement with senior vice chairman Nasir Hameed and vice chairman Javed Iqbal, observed that the ‘Refinance Scheme for Payment of Wages’ to incentivize businesses to not lay off their workers during COVID-19 Pandemic but the major challenge is high markup rate which should be dropped significantly.
Nauman Kabir said that the scheme will ease liquidity constraints of the businesses and they can use their available financial resources to meet other working capital requirements.
Nauman Kabir also welcomed the government decision of releasing sales tax refunds to the industry under the government’s over Rs1,200 billion package, saying the move will address the liquidity challenges faced by the exporters. He observed that that improved cash flow position of the industry would ensure that workers get their salaries on time.
PIAF senior vice chairman Nasir Hameed noted that it is the time to take unprecedented steps to support business and employment in this difficult situation, releasing tax refunds to the industry at a fast speed, as Pakistan’s export are expected to decline owing to spread of Covid-19.
Nasir Hameed said till Feb 2020 exports were showing growth but as Coronavirus spread throughout the world including Pakistan, exports started showing declining trend.
It is good news from the central bank that active tax payers will be given the loans at a mark-up of 4pc which will be payable in up to 2.5 years and no principle interest will be charged for the first 6 months.
According to reports, the scheme will be available to all businesses in Pakistan through banks and will cover all types of employees including permanent, contractual, daily wages as well as outsourced workers. The scheme will provide financing for wages and salaries expense for three months from April to June 2020 for those businesses which do not layoff their employees for these three months.
The mark-up on the loans under this scheme will be up to 5pc. Borrowers that are on the active taxpayers list, will be able to get loans at a further reduced mark-up rate of 4pc.
PIAF vice chairman Javed Iqbal said that its good news that the scheme has been designed to give preference to smaller businesses, as businesses with a 3 month wage and salary expense of up to Rs. 200 million will be able to avail the full amount of their expense in financing. He expected that scheme will ease the liquidity constraints of the businesses and they can use their available financial resources to meet other working capital requirements.
Javed Iqbal said that presently industrial production has been slowed down. In order to save the economy from the impacts of the slowdown, the government should take maximum economic measures to keep industrial wheels running and save the livelihood of millions.