Karachi, May 17, 2024 – The SITE Association of Industry (SAI), representing Pakistan’s largest and most diverse industrial base, has submitted a comprehensive set of proposals for the 2024-25 budget aimed at promoting industrialization and sustainable economic growth in the country.
The industrial sector, contributing 20-22% to Pakistan’s GDP and shouldering over 50% of the national tax burden, is a crucial pillar of the economy. President of SAI, Kamran Arbi, emphasized the importance of not overburdening this sector, warning the government against “killing the goose that lays the golden eggs.” Arbi highlighted the need to expand the tax base by bringing untaxed and undertaxed sectors into the fold, rather than further taxing the already heavily burdened industrial sector.
The SAI’s budget proposals were submitted to key government officials including the Prime Minister, Finance Minister, Governor of the State Bank of Pakistan (SBP), and Chairman of the Federal Board of Revenue (FBR). The proposals outline eight key recommendations spanning fiscal, monetary, trade, and energy policies:
1. Substantial Reduction in Direct and Indirect Taxation on Industries: SAI advocates for lowering the tax burden on industries to foster growth and competitiveness.
2. Reduction in Corporate Taxation, Dividends, and on Salaried Persons: Lower taxes on corporations and individuals are expected to stimulate investment and consumption.
3. Removal of Unnecessary Restrictions on Import of Industrial Inputs: Easing import restrictions would ensure a steady supply of essential materials for industrial production.
4. Implementation of a Single Cascaded Rate of Import Tariffs: Simplifying import tariffs and removing additional and regulatory duties would make industrial inputs more affordable.
5. Provision of a Predictable Forex Regime: A stable foreign exchange regime with 12-month cover for imports and exports is crucial for planning and stability in industrial operations.
6. Revision of Energy Policies: Reducing electricity and gas tariffs for industries would lower production costs and enhance competitiveness.
7. Progressive Reduction of Policy Rates: Lowering policy rates would stimulate borrowing and investment in industrial projects.
8. Lowering Lending Rates to Single Digit: Making loans more affordable would encourage industrial expansion and exports.
The SAI emphasized that the federal budget should go beyond mere number crunching and take a strategic direction focused on reindustrialization. The proposals call for:
• Prudent Debt Management: Strict adherence to The Fiscal Responsibility and Debt Limitation Act, 2005, to ensure sustainable financial practices.
• Prioritization of National Exigencies: Allocating resources strategically to address national priorities, especially reindustrialization.
• Prudent Policymaking: Enabling sound economic, social, and regulatory policies to create a favorable business environment.
• Transparency and Accountability: Ensuring responsible public spending and maintaining public trust.
• Stimulating Economic Growth: Driving investment and job creation through strategic budgetary measures.
The SAI believes that if these proposed measures are adopted, they will significantly boost industrial-driven economic growth in Pakistan. “Proposed budgetary measures if introduced will foster industry-driven economic growth in Pakistan, IN-SHA-ALLAH,” stated the SAI budget document.
The proposals highlight the crucial role of the industrial sector in Pakistan’s economy and the need for supportive government policies to unlock its full potential. By addressing these key areas, the SAI aims to create a more conducive environment for industrial growth, benefiting the broader economy and society.