The All Pakistan Business Forum on Thursday asked the government to take concrete steps in the Federal Budget 2020-21 being announced on Friday to keep the industrial wheel running especially of SMEs, saving the livelihood of millions of workers associated with the small industries. The government will have to make a visible reduction in taxes in the budget to help revive the businesses, which are near to bankruptcies owing to prolonged worldwide lockdowns amidst coronavirus.
APBF president Syed Maaz Mahmood, in a joint meeting of various trade and industrial sectors held in Lahore on Thursday to review the budget proposals for the upcoming fiscal year, urged the finance ministry that the major focus should be on greater relief to the documented and registered SMEs.
Maaz Mahmood said that the APBF, in consultation with the whole business community, finalized its budget proposals, which was also dispatched to the relevant departments.
He said that with a view to save the economy from the impacts of the slowdown due to the COVID-19 the government should announce special incentives for a cash-strapped Small and Medium Industry, which represents more than 90 percent of around 3.2 million business enterprises in Pakistan, contributing 40 percent to the GDP, employing more than 80 percent of non-agricultural workforce, and generating 25 percent of export earnings.
“The government, in budget, should allocate a sizeable amount for a soft loan with maximum markup rate of 3% especially for SMEs, as the rest of the world has been providing loans at zero percent markup to bail out their collapsing businesses,” he demanded.
Expressing dissatisfaction over the financial packages announced so far by the government for industry to deal with the challenges posed by coronavirus, he called for a significant cut in import duties and waiver of sales tax, income tax and additional income taxes which are still being charged in this time of grave crisis.
APBF leader suggested that the government should waive of the utility bills for local industry, as the industrial and commercial users of electricity were not given any concession yet.
Other participants of the meeting raised their concern over the complicated system of obtaining loans from the banks for the SMEs. They observed that private lending to the SMEs was not encouraging and the SBP needed to take regulatory measures in this regard.
He said that just statements will not work unless solid measures are taken by the government including sizable reduction in fuel prices, major cut in key policy rate, regionally competitive energy rates, quick refunds payment and relaxation in duties & taxes.
On this occasion, APBF chairman Ibrahim Qureshi said that presently industrial production has slowed down and if the situation prolongs, there will be unmanageable level of unemployment, he warned. He proposed the government to suspend sales tax collection from the local industry, restoring zero rating status to the export sector to avoid liquidity crunch in this time of crisis.
Ibrahim Qureshi said other countries are combating the situation through massive injection of funds through outright grants, ensuring availability of cheap credit to the industry and deferment of all government dues and taxes. He urged the government to ensure continuation of electricity and gas supply to the industrial sector at low rates on long-term basis and slash the interest rate to at least 5 percent with a view to achieve export target.