The Pakistan Business Council (PBC) has issued a warning, highlighting how premature deindustrialization is adversely impacting Pakistan’s economy through increased unemployment and a declining share of world exports.
In an extensive letter addressed to the government, the PBC outlined various factors contributing to this phenomenon. These include high taxes, unrealistic exchange rates, unfavorable import tariffs, ineffective trade agreements, power outages, and expensive energy costs, all of which have led to a decrease in manufacturing activity.
According to the Council, Pakistan’s industrial sector faces significant challenges due to comparatively high power and gas tariffs when compared to neighboring countries such as India, Bangladesh, and Vietnam. These elevated costs make it challenging for Pakistani exports, particularly textiles, to remain competitive globally and for domestic industries to offer competitive prices compared to imported goods.
Highlighting the impact of tariff increases on industries and investment discouragement, the Council emphasized the necessity for reforms. It suggested engaging with the International Monetary Fund (IMF) to pursue these much-needed reforms.
Moreover, the PBC stressed the criticality of providing competitive energy tariffs to industries to stimulate demand and foster economic growth. It also called upon the government to broaden the tax base while ensuring fairness and preventing double taxation, which is currently impeding business growth and investment.
The PBC advocated for a shift in strategy, moving away from reliance on tariff hikes and towards implementing comprehensive reforms to effectively address Pakistan’s economic challenges.
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