Lahore-The Friends of Economic & Business Reforms (FEBR) President Kashif Anwar has recommended the government to take serious steps for bringing down cost of production, which is very high due to constant rupee depreciation, rising power tariffs, costly fuel and escalating import duties on inputs.

In a statement issued here on Sunday, Kashif Anwar, who is also former vice president of LCCI, observed that the government will have to make visible reduction in taxes to help revive the businesses in post-corona economic strategy. 

He said that like the domestic industry COVID-19 crisis has also forced the global investors to put their new investment plans on hold. He said that there is no visible improvement in employment even after the business activities were allowed and countrywide lockdown eased. 

The small and medium industries (SMEs) -the main providers of jobs are still struggling because of lack of funds and demand. Kashif Anwar asked the government to take concrete steps to attract foreign investment, saving the livelihood of millions of workers associated with various sectors, as the FDI has declined to $114 million in July 2020, indicating that the government has failed to win the confidence of foreign investors. 

The FDI is over 34 per cent lower versus $174.8 million received in the month of June 2020. The number, however, surged over 60 per cent against $72 million recorded a year ago in July 2019, which is due to massively low FDI in July 2019. 

The FEBR President observed that it is good that the FDI is higher on a year-on-year basis, but still lower compared to the average of $250-300 million during the pre-Covid-19 period. Pakistan has reopened its economy from the lockdown. Majority of the sectors in manufacturing and almost entire agriculture sector are operational now. 

He said that foreign direct investment figures of the previous year reflected the same poor scenario, which plunged to a nine-month low at $73.4 million in July 2019, the first month of the current fiscal year 2019-20, according to the State Bank of Pakistan (SBP). The FDI was 59 per cent lower than the $178.9 million received by different sectors of the economy, particularly construction and power, in the same month of previous fiscal year. The FDI had dropped to half at $1.66 billion in the last fiscal year compared to investment of $3.47 billion in FY18. 

The FEBR Chief said that Pakistan has succeeded to improve its balance of payments with record remittances in FY20 while the FDI witnessed 88 per cent growth last year. 

He said that Pakistan has remained a potential market for foreign investors, who still have plans to make fresh investment in the country, but they have continued to wait for the return of economic stability. 

He highlighted uncertainty in the rupee-dollar parity as one of the major concerns of foreign investors. He said that the central bank let the local currency depreciate by 47 per cent to Rs168 against the US dollar during last two years. He said a slowdown in the economy had badly impacted business confidence. It is must for the authorities concerned to first create an enabling environment for the local businessmen desiring to make new investment. 

He said that the return of stability to the financial health of the firms is a must to attract new foreign investment in Pakistan. 

He said that with a view to save the economy from the impacts of the slowdown due to the COVID-19 the government should offer out of the box solution for a cash-strapped SMEs, which represents more than 90 per cent of around 3.2 million business enterprises in Pakistan, contributing 40 per cent to the GDP, employing more than 80 per cent of non-agricultural workforce, and generating 25 per cent of export earnings.