LAHORE – The All Pakistan Textile Mills Association (APTMA) Tuesday urged the State Bank of Pakistan to reduce markup rate to at least 7 per cent, bringing it at par with regional countries, including China, India, Sri Lanka and Bangladesh where it is 6.56, 8, 7.75 and 7.74 percent respectively.

The newly-elected APTMA Central Chairman Ahsan Bashir said that low markup was absolutely essential for Pakistan to compete with the regional economies in the world marketplace. He said that the inflation was a matter of controlling demand and supply and if the supply chain was up to the mark, the inflation would automatically remain at comfort level. Citing the example, he argued that as soon as the central bank has started ease policy rate the inflation has also adopted downward trend.

He said that the government would have to consider out-of-box proposals to propel economic activities that have been facing complacency and no growth for the past many years with alarmingly low productions and relatively high cost of doing business. He said that the State Bank of Pakistan had failed to arrest inflation with its tight monetary policy therefore there was no point in keeping the markup rate in double digit. He said that the existing double digit markup had already caused undue damage to the economy particularly textile industry which would take long time to recover.

He said that both local and foreign investments had already nose-dived because of high cost of doing business in Pakistan, while the FDI situation in other regional economies was quite visible. He said that it was a common phenomenon that local investments are a barometer for foreign investors and negligible local investment has shied them away. He said that the country at the moment was in dire need of energy, continuity in economic policies and a GDP growth of over six per cent for next six to seven years in a row to overcome internal and external challenges.

APTMA group leader Ijaz Gohar said that a cut of 50 to 100 basis points would not be doing any service to the dwindling economy. He said that it was very unfortunate that we have failed to learn any lesson from the tighter monetary policy stance adopted by the State bank of Pakistan in the yester years.  He feared that if proactive, well-tailored and well consulted measures were not taken and the economy remained sliding downwards, the days were not very far when Pakistan would become a trading country instead of a manufacturing hub.

APTMA Punjab Chairman Shahzad Ali Khan reminded the policy makers that the private sector was the only hope for salvaging the country from a total economic collapse therefore a significant cut in cost of doing is direly needed.

He said that in the last few years, the private sector had suffered set-backs because of higher cost of doing business. Investment in new industrial projects and expansion in existing industry has come to a standstill. Massive flight of capital has taken place to other countries of the region where investment and business environment is favorable and future prospects are brighter. Founders Group of the LCCI has also demanded of the State Bank of Pakistan to play his role to save the national economy and industry by bringing the markup rates to single digit reducing it by 2.5 to 3%.

In a statement issued here, the leaders of Founders Group Mian Muhammad Ashraf and Iftikhar Ali malik said that in any country where the economy is facing a recession, the interest rates are brought down to stimulate growth, whereas in Pakistan it is the other way round. In the last two years interest rates in Europe and the United States have been brought down close to Zero to save the economies from collapse. This is the time that interest rates should be brought down to single digit to spur growth.

Founders Group leaders said that ongoing economic scenario shows that there is hardly any time left for economic managers of the country and they all should understand the gravity of the situation that there would be no business community buyer if the interest rates are kept higher.

They said that the State Bank of Pakistan should understand that its continued tighter stance is inflicting a very heavy loss on the nation as the economy has already paid a very high price because of high interest rate.