High cost of doing business disastrous for economy: APBF

The industry has been overburdened due to recent increase in electricity tariffs

ISLAMABAD (Web Desk) - The All Pakistan Business Forum has said that the high cost of doing business has proved to be dangerous for Pakistan’s economy, discouraging investment both in capacity and capability, calling for lessening the burden of heavy taxes on energy sector.

APBF President Syed Maaz Mahmood said that the industry has been overburdened due to recent increase in electricity tariffs which is aggravated by the extraordinary upsurge in petroleum prices, triggering severe anxiety not only amongst the masses but also the business and industrial community.

He urged the government to shut down all costly oil-fired power plants in order to ensure consumers had access to cheaper energy. He lamented that the previous administration did not prioritize the rehabilitation and maintenance of older power plants, resulting in multiple system constraints and significant losses.

He observed that the government’s inability, ill planning and financial woes had multiplied the miseries of businesses which were facing unscheduled power outages across the country. At the same time, the industry was already paying heavy electricity bills of up to Rs50 per unit, including surcharges and other taxes, he added.

Shocked by the unprecedented fourth consecutive jump in petroleum product prices, he said the move would worsen the economic crisis, multiplying cost of production and intensifying miseries for the trade and industry.

APBF Chairman Ibrahim Qureshi said that it has become almost impossible to run the industries at such a high cost. This was the fourth consecutive hike in petroleum prices while, in the tenure of the caretaker government alone, the petrol prices have been raised by almost Rs60 per litre, which was going to create a lot of problems for the already ailing economy as the production has been curtailed by many industrial units to a great extent due to high cost.

Ibrahim Qureshi criticized the caretaker government that it should have kept the prices of petroleum unchanged due to the falling landing cost of imported crude on account of the persistent rise in the rupee strength against the dollar in the last eight interbank sessions despite rising crude oil prices in the world market.

Syed Maaz Mahmood said that it is fact that the given the economic crisis being faced by the country, the government has to take harsh steps to generate the required revenue for overcoming expenditures and fulfilling international commitments. However, instead of taking these steps back-to-back, the government should devise some kind of an effective strategy to ensure some sigh of relief to the masses and the industry who will not be able to bear the brunt caused by consecutive price hikes.

The APBF President stressed that the emerging situation has to be efficiently addressed and handled very carefully otherwise, the rising petroleum prices and electricity tariffs would continue to increase the cost of doing business, which would terribly affect the industrial performance, raise unemployment and open the floodgates of inflation, particularly for the middle and lower segments of the society, besides making the poor poorer due to unbearable inflation.

The unexpected massive increase in petrol and diesel prices was widely felt as inflationary at the retail level and the State Bank of Pakistan may have to review its decision of leaving the key interest rate unchanged. He believed that the inflation would be in the range of 30-31 per cent in the ongoing month which is against the SBP’s expectation to bring it down to 20-22pc.

After keeping its policy rate unchanged at 22 percent by the central bank, the government increased the petroleum prices by over Rs26 per litre making it clear that inflation would be higher in September.