Faisalabad Chamber of Commerce & Industry (FCCI) has demanded the government to instantly drop the markup rates after the significant drop in inflation. This is necessary as a way of solidifying the economy and extending the support to the industrial segment.
Dr. Sajjad Arshad, Senior Vice President of FCCI, stressed during a press conference that improving one economic indicator which is not enough. “The government must act decisively by lowering the markup rates to help the industries access cheaper finance, import machinery, and to create job opportunities for the growing unemployed in population,” he emphasized.
IPPs and Unified Chamber Stand
Dr. Arshad pointed out that the FCCI, alongside other chambers, has been advocating for a reduction in the markup rates and addressing the concerns regarding to Independent Power Producers (IPPs). “A petition is pending in the Supreme Court to conduct a forensic audit of IPP agreements, allowing 240 million Pakistanis to see that how these deals were made and by whom,” he said.
The FCCI has taken a strong stand on these issues from the Federation of Pakistan Chambers of Commerce & Industry (FPCCI) platform, and they continue to press for transparency and accountability in IPP dealings.
Economic Relief for Industries
Dr. Arshad called for a significant reduction in the markup rates to help industrial sectors, particularly SMEs to import the latest machinery and reduce production costs. “The industrial sector needs access to modern technology at a lower cost to remain competitive,” he noted.
Regarding electricity costs, Dr. Arshad highlighted the finance minister’s budget announcement of providing the electricity to the industrial sector at Rs. 14 per unit. However, the implementation is still in pending, and ad-hoc policies continue to hinder long-term investment. Frequent policy changes leave investors uncertain about the safety of their investments, he remarked.
Long-term Economic Policies
While addressing the government, Dr. Arshad highlighted the need to develop a long-standing policies for 15-20 years to enhance the stability of investment in the country, including in the sphere of solarization. Therefor, the policy holder asserted that investors require certainty that the economic policies in operation will not be changed.
At the FESCO level, the consumption of electric power has reduced approximately by 40-45% but mere 3-4% reduction has come from solar power. The majority of reduction is due to the higher tariffs and the subsequent closure of industries, he explained.
Conclusion
In his concluding remarks, Dr. Arshad reiterated the demand for a significant reduction in markup rates. “If bringing the markup rate to single digits isn’t feasible, the government should at least reduce it by 400 basis points. This will allow the investors to import the machinery and raw materials, kickstarting much-needed economic activity,” he urged.
FAQs
Q1. Why is the FCCI calling for decrease in the markup rates?
A1. Therefore according to the FCCI the markup rates that are lower will offer cheap funds to the industries which in turn will help them in developing new machineries and hence job opportunities.
Q2. What is wrong with IPP agreements?
A2. The FCCI is calling on the IPP agreements to be subjected to a forensic audit in order to reveal details of what the people who signed the deals did.
Q3. How does the FCCI intends to reduce cost of production?
A3. Lower markup rates are therefore possible which can be useful especially for industries such as SMEs to import more advanced machineries hence affect production costs.
Q4. What policy shifts of the long-term does FCCI recommend?
A4. FCCI also suggests that long-term economic strategies that entail activities like solarization should run for 15-20 years to ensure the investors benefit from stable political environment.
Q5. How has Faisalabad been impacted by the changes in electricity consumption?
A5. Electrical usage has reduced by 40-45 %, the major part stemming from high tariffs and shut-down of industries, and a limited contribution from solar power.
