High cost of doing business harmful for trade, industry

LAHORE   -   The Disposable Food Packaging Association (DFPA) has termed the high cost of doing business harmful for businesses, saying ever-increasing cost of produc­tion was the real threat to the economy amidst frequent up­ward revisions in policy rate and continuous fluctuations in rupee against dollar.

In a statement, President DFPA Ahsan Shahid said that constant hike in power tar­iff has pushed the electricity prices higher and added to the already soaring cost of trade and industry. The government must shut down all expensive oil-based power plants to en­sure availability of cheaper en­ergy for consumers, he said and condemned the government for shifting power distribution companies’ inefficiencies’ bur­den to the consumers by jack­ing up the tariff under the guise of Fuel Charges Adjustment.

Ahsan Shahid observed that the aggressive economic measures, high borrowing rates, inflation, oppressive taxation and unstable cur­rency have been negatively affecting running businesses.

With a view to deal with fiscal challenges, he asked the economic managers to work on the three-way strat­egy by implementing short-term goals that will help to keep generating resources for smooth fiscal operations, me­dium-term goals where the they should focus on financial inclusion, documenting the economy by designing a sys­tem where all businesses can be registered and properly document their income in­cluding collection of sales tax, initiating the process of pri­vatisation as well as improv­ing governance by introduc­ing reforms in each sector. As a long-term goal, the country must focus on improving its human capital, and revamp­ing IT sectors by extending facilitations and providing all the requisite supports.

The DFPA president stated that the significant jump in electricity prices and hike in gas tariffs to meet the IMF condition will put additional burden of billions of rupee on consumers. He observed that it is unfortunate that the au­thorities in all governments continued to approve billions of rupees’ additional burden on consumers through a direct tariff increase and an indirect increase through the with­drawal of subsidies given to exporters and farmers earlier.

He said that the government liquidity and external vulner­ability risks are elevated and there remain considerable risks around its ability to se­cure required financing to ful­ly meet its needs for the next few years. It is to be noted that the authorities had pledged to stop any further rise in circu­lar debt, adding that around Rs250 billion was added to the gas circular debt annually though the actual figures are available with Petroleum Divi­sion. However, if 11.5 percent price hike for SNGPL and 11 percent tariff for SSGC was not implemented then the circular debt will rise to Rs740 billion.

Ahsan Shahid said that the economic managers did not have any pragmatic plan to address this liability, apart from asking for more loans to repay existing debt. Like­wise, the target for current financial year’s exports is too low to meet the coun­try’s revenue. The conven­tional approach of focusing solely on improving exports while pursuing a passive and imprudent foreign policy to­wards neighboring countries, poses a significant challenge in meeting export targets.