PkRevenue.com – The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has urged the government to reduce interest rates and electricity tariffs to revive the country’s struggling industrial sector.
Interest Rate Cut and Tax Reforms
Zaki Aijaz, the FPCCI Regional Chairman and Vice President, said at a press conference that the interest rate should be brought down to 12% and taxes on the retail sector should be collected at the final stage. He argued that the current high interest rate of 22% is stifling business activity and making it difficult for companies to grow. Aijaz pointed out that inflation has decreased significantly in the past year, from 37.97% in May 2023 to 11.8% in May 2024, and the interest rate should reflect this improvement.
Focus on Industrial Power Needs
The FPCCI also demanded a reduction in electricity prices for industrial consumers. Aijaz proposed a uniform rate of 9 cents per unit for all industries. He emphasized the need to revisit contracts with Independent Power Producers (IPPs) and renegotiate debt repayment periods to bring down electricity costs. The FPCCI called for the elimination of the current Rs 240 billion cross-subsidy in the energy sector, where industrial consumers pay higher rates to subsidize other sectors.
Relief for Tribal Area Industries
Aijaz acknowledged the benefits enjoyed by industries in the Federally Administered Tribal Areas (FATA) and Provincially Administered Tribal Areas (PATA) regions due to tax exemptions. However, he suggested a phased approach to taxing these industries over the next two to three years.
Reopening Closed Industries
The FPCCI representatives believe that a reduction in electricity rates and interest rates would encourage the reopening of closed factories. Aijaz claimed that lower costs could lead to the resumption of operations in several industries, generating an additional 3,000 megawatts of electricity consumption and Rs 500 billion in revenue for the government.
Call for Competitive Energy Prices
The FPCCI highlighted the importance of competitive energy prices for Pakistani businesses to compete internationally. Aijaz pointed out that neighboring countries have electricity prices around 7 cents per unit, significantly lower than Pakistan’s current rates. He urged the government to take steps to bring down energy prices and establish a fairer pricing mechanism for industrial consumers.
The FPCCI’s demands come as Pakistan grapples with economic challenges, including high inflation and a slowdown in industrial activity. The government is currently preparing its budget for the upcoming fiscal year, and the FPCCI hopes that its recommendations will be considered.
