Economy witnessing recovery thru LSM, remittances: Mian Zahid

KARACHI: Mian Zahid Hussain, President Pakistan Businessmen and Intellectuals Forum & All Karachi Industrial Alliance, Chairman National Business Group Pakistan and Chairman Policy Advisory Board FPCCI, said that the economy is witnessing a fragile but undeniable recovery, evidenced by the rebound in Large-Scale Manufacturing and the sustained robustness of foreign remittances.

Speaking to the business community, he noted that the manufacturing sector is finally showing signs of life after a prolonged slump, with the HBL Pakistan Manufacturing PMI, compiled by S&P Global hitting a 10-month high of 52.8 in December.

He emphasized that for the first time in six months, new export orders have registered growth, signalling that Pakistani industrialists are finding ways to compete globally despite facing some of the highest energy costs in the region.

Mian Zahid Hussain stated that this industrial momentum is being strongly supported by the patriotism of overseas Pakistanis. He highlighted that workers’ remittances have remained a pillar of stability, recording an impressive inflow of $3.6 billion in December alone, pushing the total for the first half of FY26 to over $19.73 billion.

He noted that these inflows have been critical in stabilizing the rupee at the 280-level and maintaining foreign exchange reserves, thereby providing the government with the necessary fiscal space to make bold policy decisions.

However, the veteran business leader warned that this hard-won stability could be jeopardized if the liquidity crisis in the export sector is not addressed immediately. He strongly advocated for the government to accept the proposal of a 1 percent fixed final tax regime for exporters.

He explained that the current complex and multiple tax structure, coupled with the withdrawal of “zero-rating” on local supplies under the Export Facilitation Scheme, has trapped billions of rupees in pending refunds, effectively choking the cash flow of Large, Small and Medium Enterprises.

He argued that implementing a one percent fixed tax would not only simplify compliance and reduce harassment by tax authorities but would also provide exporters with the predictable financial environment they need to commit to long-term orders.

Mian Zahid Hussain further cautioned that while LSM numbers are positive, the textile sector, the backbone of exports, is still navigating a “volume crisis” due to the local cotton shortage and high input costs. He urged the authorities to view the 1 percent fixed tax not as a concession, but as a strategic investment in export sustainability.

He concluded that with remittances providing a currency cushion and manufacturing showing green shoots, the government has a unique window of opportunity to implement this tax reform and solidify the country’s path toward an export-led economic revival.

Copyright Business Recorder, 2026