LAHORE: The Lahore Chamber of Commerce & Industry Friday expressed deep concern over Mini Budget and feared that it will aggravate the economic circumstances besides adding to the miseries of the trade and industry.
LCCI President Mian Nauman Kabir expressed surprise on the timing of the supplementary finance bill saying that at a time when the trade and industry need handholding of the government and supportive measures, the government has imposed taxes on various sectors of economy and withdrawn the exemptions in order to meet the conditions of the International Monetary Fund (IMF).
He said that it is a negative move and it will further enhance the cost of doing business, give rise to the inflation, hinder business growth and hit the confidence of the foreign as well as local investors very hard.
The LCCI President said that the Government has proposed to impose 17% Sales Tax worth Rs. 343 Billion on more than 150 items which include machinery; pharmaceutical and imported food items will hinder the economic growth.
In a statement, the LCCI President Mian Nauman Kabir said that the imposition of proposed 17% Sales Tax on imported plant and machinery would make it difficult for our industrial sector, particularly SMEs to undertake technological up-gradation and hence the export competitiveness of our Industrial sector would be adversely affected.
This measure can start a new wave of De-industrialization in the country. It is only after a great difficulty that our industrial sector came out of the trap of negative growth rates (-3.77% in 2019-20) and grew by around 3.57% in 2020-21.
Mian Nauman Kabir was of the view that manufacturing of our hi-tech sectors would also be affected by the proposed measures in the mini-budget. On one hand, the Government has recently introduced the Mobile Device Manufacturing Policy to encourage the local production of mobile phones while on the other hand the Government is imposing Sales Tax on import of machinery for Mobile Phones manufacturing. The LCCI President clarified that our industry is heavily dependent on imports of quality raw materials as they are not available locally. The imposition of Sales Tax on the raw materials of pharmaceutical industry would hinder the growth of pharmaceutical sector which has been showing a sound performance since the last couple of years. Our pharmaceutical exports have increased to US$ 273 million in 2020-21 as compared to US$ 215 million in 2019-20. This measure can dent the export competitiveness of our pharma sector and reverse the trend of increasing exports.
Mian Nauman Kabir said that the increase in Sales Tax to 17% on imported re-melt able scrap can adversely affect the performance of our Engineering sector which comprises mainly of SMEs.
He was of the view that we need to diversify our energy mix and bring down the cost of electricity production by increasing the share of renewable energy, particularly Solar. The measure of abolishing Sales Tax exemption on import of Solar Panels can prove to be a big obstacle in achieving the objective of making our energy mix more cost effective.
Copyright Business Recorder, 2022