LAHORE  - The business community has rejected monetary policy and said that maintaining mark up at 10 per cent would add more to the Non Performing Loans and unemployment in the private sector.

They said that the industry was expecting a reduction in interest rate to single digit, as the industry was accruing heavy losses on present levels amidst unprecedented energy crisis in the country.

Demanding low markup especially for the exporters, the Rice Exporters Association vice chairman Chela Ram criticised the SBP approach on curbing inflation through high mark up, as major borrower of the banks was the government and not the private sector. The government was borrowing heavily at the cost of the growth of private sector, which was losing viability fast due to high financial cost, he added.

Reap vice chairman said that sudden drop in dollar against rupee turned all export business in red and exporters suffered huge losses in last 10 days. Payments expected to be realized at Rs. 105 were received at 6% to 8% less value as against thin margin of profit which ranges from 1% to 2.5% due to energy crises and higher cost of doing business, he added.

Chela Ram said that absence of surplus liquidity in the market was prime reason behind lack of investment in the industry. The population, on the other hand, was multiplying fast, which means high rate of unemployment in the absence of expansion plans of industry due to high interest rate.

REAP Vice Chairman 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 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.

The Garments Manufacturers and Exporters Association senior vice chairman (NZ) Jawwad Ch 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.

He 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 past 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.

Jawwad Ch 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.

LCCI President Sohail Lashari 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.