ISLAMABAD: Leading economists of the country urged the government to take measures to incentivise the manufacturing sector and broadening the tax base to make economic growth sustainable.
In a panel discussion at the seminar organized by Pakistan Business Council on the topic ‘Dialogue on Economy, former governor SBP Dr Ishrat Husain said that regional countries like Japan, South Korea and China made phenomenal progress because they give top priority to their own industry and from ink to high tech products they always preferred their local brands.
He said the manufacturing sector is catering the needs of Pakistan’s formal economy which is estimated around USD350 billion, whereas the informal economy is also roughly USD350 billion and to meets its needs country import huge amount of goods.
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He said poor regulatory network, high taxes and power tariff created bumps on the road of growth. He said to finance the trade deficit the government compelled to borrow USD26 billion per annum, which is not sustainable at all.
Dr Ishrat Husain said the government should evolve a growth model which based on non-inflationary debt. He said the country needs industries like petrochemical complexes, steels and aluminium producing mills, plastic raw material producing plants to cater the needs of downstream industries which right now dependent on costly imported raw materials.
Vice Chancellor LUMs Dr Ali Cheema said that the country would not make progress without economic decentralization. He said China made phenomenal progress because its 25 percent revenue goes to local governments.
He said the government should enhance its investment in health, education and transport sectors to control economic unrest. He said till now the major portion of investment used to go in property business because the tax on it was negligible and less than one percent whereas on manufacturing sector tax rate is almost 30 percent.
Former Governor SBP Reza Baqir urged the Government to develop a growth strategy and to make it a success fix responsibility on any institution. He said the Government should facilitate the manufacturing sector but should stop protecting the inefficient state-owned enterprises.
Former Governor SBP Shamshad Akhtar said the tax to GDP ratio in the country increased by taxing the formal economy which was already paying heavy taxes. She said the FBR should work on broadening the tax base rather than squeezing the manufacturing sector for more revenue.
Copyright Business Recorder, 2025