The Pakistan association of automotive parts and accessories manufacturers (PAAPAM) has welcomed further 50 basis points reduction in the interest rate by the State Bank of Pakistan.
Former chairman PAAPAM and founder chairman All Pakistan Business Forum, Syed Nabeel Hashmi told Business Recorder here on Sunday that the SBP noted year-on-year headline CPI inflation to have decelerated to 1.7 percent in August 2015 from 7.0 percent in August 2014. Following its declining trend of the past several months, the 12-month moving average CPI inflation came down to 3.6 percent in August 2015 from 8.4 percent in August 2014.
The industries cost of doing business has been accelerating tremendously mainly contributed by the rising cost of energy. Therefore the mark-up relief will support further investment and growth. It is also expected to increase the lending to the private sector that was also on a declining trend, he added.
However Hashmi believed that to get the full impact of the reduction the SBP also needs to rationalise its lending policies including SME specific lending rules and regulations. Until the SME sector does not becomes the major beneficiary of this decrease grass root level growth and technology enhancement and employment will remain a distant dream. The lending rules to SME's are very strict and geared to ensure that Bank's do not lend to them.
The GOP's own borrowing policy is another retarding factor that deters the Banks to follow competitive and aggressive lending strategies that must be corrected, he suggested.
Welcoming the reduction in the interest rate, Mumshad Ali Sr Vice Chairman said that mark-up on ZTBL loans should also be cut down so that farmers can buy the tractors and other agriculture implements on lower interest rates and boost production of agriculture commodities.
Mumshad urged the government to implement the Tractor subsidy Schemes announcement by Punjab/Sindh Governments in their respective finance bills some two months back, as this was expected to give a boost to tractor production which has seen a declining trend in the last few years due to GST rate changes, floods, and commodity price crashes particularly rice, potato, and cotton.
Comments
Comments are closed.