The Lahore Chamber of Commerce and Industry (LCCI) Monday thanked the government for abolishing Rs 102 billion cross-subsidy imposed on the industrial sector and demanded the immediate withdrawal of Rs 90 billion cross-subsidy imposed on traders and commercial consumers across the country.
LCCI President Faheem ur Rehman Saigol stated this while a press conference here at Lahore Chamber. LCCI Senior Vice President Tanveer Ahmed Sheikh, Vice President Khurram Lodhi and Executive Committee members also accompanied him.
He said, the reduction of electricity tariff by Rs 4.04 per unit and abolition of cross-subsidy is a major and timely relief for Pakistan’s industrial sector. He added that this decision will help local industry counter the expected competitive pressure arising from the Free Trade Agreement between India and the European Union.
Saigol said that three percent reduction in export refinancing rates and a Rs 4.04 cut in electricity wheeling charges will provide significant relief to exporters and industrial units. He urged the federal government to issue immediate notifications so that industries and businesses can accelerate production without delay.
He said the Rs 90 billion cross-subsidy imposed on traders and the commercial sector has become unbearable. Its removal would reduce the cost of doing business, improve consumers’ purchasing power, help control inflation, stabilize retail prices, and boost overall economic activity.
The LCCI President pointed out that Pakistan, with a population of around 250 million, is a large consumer market. Lower inflation would increase spending, enhance business activity, and improve government tax revenues.
Commenting on super tax, he said that its implementation after court decisions may create liquidity issues for major taxpayers. He suggested the government to collect super tax in easy installments to avoid financial stress on the business community while achieving revenue targets.
Faheem ur Rehman Saigol said that the Rs 4.04 per unit reduction in electricity tariff translates into about 1.45 percent in US dollar terms, which is higher than many regional economies. However, to effectively compete with India, China, Vietnam, and Bangladesh, Pakistan must bring both electricity tariffs and interest rates into single digit.
He stressed that exports cannot grow unless energy costs and interest rates for SMEs and large industries are reduced to competitive levels and emphasized the need to provide a level playing field for sustainable industrial growth and job creation.
Speaking on energy reforms, the LCCI President said, Pakistan must shift from expensive oil-based power generation to hydropower. He added that through small dams and water reservoirs, more than 20,000 megawatts of low-cost electricity can be produced.
Senior Vice President Tanveer Ahmed Sheikh and Vice President Khurram Lodhi said that reducing energy and financing costs is crucial for Pakistan to compete with India, China, and Bangladesh. They expressed hope that after the completion of the IMF programme, the government would have greater flexibility to introduce reforms and that the economy would gradually move toward stability.