Karachi industrialists warn that rising fuel, energy and tax costs are threatening factory operations, exports, investment and employment.
KARACHI: The business community has warned that repeated petroleum price increases, rising energy costs and heavy taxation are putting industrial survival at risk and could result in factory closures, declining exports and increased unemployment.
Industrialists in Karachi’s largest SITE industrial area have strongly criticised the latest increase in fuel prices, arguing that higher production costs are making Pakistani manufacturers and exporters increasingly uncompetitive.
SITE Association of Industry (SAI) President Abdul Rehman Fudda questioned whether the government wanted industries to remain operational and employment to be protected, saying that rising operating costs could leave industrialists with little choice but to shut their plants.
Industrialists call for 15-day fuel pricing cycle
Fudda urged the government to replace the daily petroleum pricing mechanism with a 15-day pricing cycle, arguing that greater price stability would allow industrialists, exporters and businesses to calculate production costs, determine product prices and enter commercial agreements with greater certainty.
He said business and industrial representatives had repeatedly called for lower petroleum prices and a review of the existing pricing mechanism.
However, the government has increased the price of petrol by Rs12.90 per litre and diesel by Rs3.72 per litre, adding further pressure to already high industrial costs.
Fudda said the latest increases were particularly concerning as the government was simultaneously seeking to increase exports, attract investment and improve the ease of doing business.
“On the one hand, committees are being formed and commitments are being made to increase exports and facilitate businesses; on the other, policies are being pursued that are making it increasingly difficult for industries to remain operational,” he said.
Fuel volatility affects production costs
According to the SAI president, frequent changes in petroleum prices make it difficult for manufacturers and exporters to accurately calculate production costs, offer competitive prices and secure new commercial contracts.
He said small and medium-sized enterprises (SMEs) were already facing difficult operating conditions, while large-scale manufacturing units were also confronting growing challenges to their survival.
Unpredictable fuel costs can make it harder for businesses to plan production and pricing, particularly for industries that rely heavily on transportation and energy-intensive operations.
Karachi industries face multiple cost pressures
Fudda said industries were already dealing with high electricity and gas costs, inadequate water supplies, law-and-order concerns and heavy taxation.
Against this backdrop, he argued that efforts to attract new and foreign investment would have limited impact unless existing industries were first stabilised and made more competitive.
He warned that declining industrial activity would directly affect employment, particularly among young people, potentially worsening wider social and economic problems.
Existing industries must be stabilised
Fudda stressed that ensuring the continued operation of existing industries should be an immediate government priority, describing a functioning industrial base as essential for employment generation, exports and sustainable economic growth.
“If existing industries are forced to close, efforts to attract new investment and increase exports will lose their effectiveness,” he said.
He urged the government to take immediate measures to reduce industrial costs, stabilise fuel pricing and provide a predictable policy environment for manufacturers and exporters.
The industrial community’s concerns come as businesses continue to seek measures that can improve competitiveness and protect domestic production while supporting the government’s objectives of increasing exports and attracting investment.