FBATI president underscores need for reducing interest rates

KARACHI: The increasing cost of doing business and high interest rates are major challenges for industries to maintain the survival of their optimal production in the country, which caused the downsizing of the staff and output capacity in industries and hurting the exports of the country, the President Federal B Area Association of Trade and Industries (FBATI) Syed Raza Hussain said.

Talking to media, he mentioned that utility prices, mainly industries have seen a steep decline in the manufacturing and assembling capacity due to up to the three-time increase in utility prices, mainly electricity and gas increased during the last year. Also, industries are paying exorbitantly for getting water supplies in their business units, which has amplified the cost of production across the country. SMEs have been affected badly after the sporadic surge in electricity prices as several units are nearing closure, he said and added the government should renegotiate the tariff of Independent Power Producers (IPPs) to reduce the cost of electricity for businesses and traders, he further said.

President FBATI said the government should introduce a financing scheme for industries and SMEs for setting up their solar power plants at an affordable interest rate in order to provide an alternate source of energy. Besides, the government should honor its commitment to pay pending increment benefits or power subsidy to SMEs based in Karachi.

According to the State Bank of Pakistan (SBP), the credit to the private sector stood negative as industries retired an amount of Rs376 billion since the beginning of the financial year as compared to the retirement of Rs282 billion loans recorded in the same period of the last year.

Either the government or the SBP, the interest rates should be reduced to a level of single digit to attract local investors and businessmen for expanding their businesses. This could also be done with the specialized scheme by the SBP for large commercial industries and SMEs.

He pointed out an economic stability is a good sign at present with macroeconomic indicators are showing positive growth, however, this economic recovery or growth is possible through the stability of the business and industries on a long-term basis.

President FBATI said that the government should develop a conducive ecosystem for attracting investors and businessmen, including the infrastructure in Karachi.

Copyright Business Recorder, 2024