The All Pakistan Business Forum (APBF) has said that ever-increasing cost of production in the country is the real threat to small-scale businesses (SMEs), as frequent upward revisions in policy rate and continuous fluctuations in rupee against dollar are posing further threat to the economy.
APBF President Syed Maaz Mahmood observed that the aggressive economic measures, high borrowing rates, inflation, oppressive taxation and unstable currency have been negatively affecting running businesses, many of which have closed their operations, while the remaining are struggling for survival. With a view to deal with fiscal challenges, he asked the upcoming elected government to work on the three-way strategy by implementing short-term goals that will help to keep generating resources for smooth fiscal operations, medium-term goals where the government should focus on financial inclusion, documenting the economy by designing a system where all businesses can be registered and properly document their income including collection of sales tax, initiating the process of privatization as well as improving governance by introducing reforms in each sector. As a long-term goal, the country must focus on improving its human capital, and revamping IT sectors by extending facilitations and providing all the requisite supports. In the same way, we also need to work on designing a comprehensive and proactive strategy to tackle challenges related to strengthening border security and implementing effective and comprehensive Anti-Money Laundering and Terrorist Financing measures holding accountable and taking to task all those who are involved in illegitimate activities, undermining both our economy and national interests.
The APBF Chairman Ibrahim Qureshi said that the government does not have any pragmatic plan to address this liability, apart from asking for more loans to repay existing debt. Likewise, the target for current financial year’s exports is too low to meet the country’s revenue.
Ibrahim Qureshi said that the conventional approach of focusing solely on improving exports while pursuing a passive and imprudent foreign policy towards neighboring countries, poses a significant challenge in meeting export targets. Despite strained relations, the United States remains the largest importer of Pakistani products. Still, there are no efforts to tap into the vast markets of neighboring countries or negotiate trade agreements with them.
The APBF President said that even though Pakistan and China enjoy close relations, yet the volume of exports to China is significantly lower compared to USA. Furthermore, the existing Pakistan China Free Trade Agreement (PCFTA) tends to benefit Chinese-origin corporations more than Pakistani businesses, giving them greater market access at the expense of Pakistani products.
Syed Maaz Mahmood said that the government is neglecting two important factors, namely, Information Technology and export of human capital that together can contribute towards generating foreign exchange and mobilizing revenue. It is essential to concentrate on nurturing a skilled workforce and assisting them in securing international employment opportunities. This approach would have a positive impact on our foreign policy and help in building foreign exchange reserves. Given the era of the fourth industrial revolution, Pakistan should prioritize facilitating IT businesses, enabling their access to international markets. By doing so, we can assert our fair share in the international market for IT-related exports.
It is good that State Bank of Pakistan has outlined the central bank’s vision for the future, with a strong focus on price stability. The SBP further emphasized the need to expand access to financial services for a larger segment of population and revealed that under Vision 2028, efforts would be made to bring more people into formal financial system. Furthermore, SBP is planning to connect Pakistan’s remittance system with Arab Monetary Funds (AMF) Buna, a cross-border payment system. This integration is expected to significantly improve speed and reduce cost of remittance transactions.
Although above measures would improve our financial system, yet the government should reconsider its approach to expanding the tax base, as it currently burdens existing taxpayers instead of including new sectors.