KARACHI: President Karachi Chamber of Commerce & Industry (KCCI) Junaid Esmail Makda, while expressing sheer dismay over yet another hike in petroleum prices, devaluing rupee and unbearable inflation, rejected the increase in petroleum prices just ahead of upcoming Eid ul Fitr as a gift for the festival which would not only intensify the hardships for the masses but would also create a very difficult situation for the business and industrial community due to high cost of doing business.
In a statement issued, President KCCI noted that after the upsurge in POL prices, HSD price has increased to Rs126.82 while petrol has touched the highest mark of Rs112.68, creating a very difficult situation for people from all walks of life in the ongoing era of inflation.
“Our Prime Minister talks a lot about cost and ease of doing business in Naya Pakistan, but how is it going to be possible when we have to frequently face hikes in prices of petroleum and other utilities, fluctuating exchange rates with higher duties on import and higher interest rates”, President KCCI asked.
Referring to the recent severe devaluation of Pakistan rupee against dollar, President KCCI said that the rupee was seen devaluating by approximately 23 percent against US Dollar from Rs123.60 to around Rs152.00, making it the worst performer when compared with 13 other currencies of Asia.
“Severe devaluation of rupee under IMF dictates along with State Bank’s strategy to keep on raising the key interest rate have resulted in raising the cost of doing business and the inflation, intensifying the hardships for the industry and the public therefore, it is really crucial to review the current strategies being pursued by the economic managers as these have proved counterproductive, detrimental for the economy and totally contrary to government’s claims towards the Ease of Doing Business”, he added.
He stressed that the emerging situation has to be efficiently addressed and handled very carefully otherwise, the rising petroleum prices and exorbitant devaluation will continue to increase the cost of doing business, which would terribly affect the industrial performance, raise unemployment and open the floodgates of inflation, particularly for the middle and lower segments of the society, besides making the poor more poorer due to unbearable inflation.
Junaid Makda further elaborated that the rising dollar would lead to costlier imports and the exporters will also bear the brunt due to rise in cost of imported raw materials, pushing the economy into further deep crisis. Despite so many measures taken to discourage the imports including the imposition of Regulatory Duty on many items, Pakistan’s imports remain inelastic and a weaker rupee will not help. Mostly, they consist of raw materials, intermediate goods or machinery. Any devaluation would increase their cost thus making Pakistani exporters less competitive, he added.
He suggested that State Bank needs to ascertain the factors weakening the value of rupee and also check the possibilities of undue speculations and panic buying which, if done, would certainly help in stabilizing the rupee and restore the confidence of the business community.
Referring to SBP’s Monetary Policy Statement in which benchmark interest rate was raised to 12.25 per cent, President KCCI stated, “The State Bank has to realize that tighter monetary policy stance never yielded positive results therefore, it is high time that the central bank must soften its stance in order to ensure relief to the businessmen and industrialists who are playing a major role in Pakistan’s economic progress and prosperity by continuing their businesses in extremely dire circumstances”, he added.
President KCCI further noted that the Asian Development Bank has forecasted Pakistan’s economic growth at 3.9% for FY19 and 3.6% in FY20 while the World Bank has predicted growth rate of 3.4% in FY19 and a further decrease to 2.7% in FY20. Moreover, the lowest projected growth for FY19 comes from the IMF at 2.9% which the international lender expects to drop to 2.8% in FY20. All these poor forecasts by these international organizations paint a bad picture for potential investors as they get scared away which was really worrisome, he opined.
He hoped that the federal government would realize the gravity of the situation and accordingly take steps to stop further devaluation of rupee against dollar while the State Bank’s benchmark interest rate will also be brought down to single digit to spur economic growth and industrialization in the country. A favorable reduction in discount rate would bring down the cost of doing business, attract fresh investment and promote expansion & industrialization, besides creating job opportunities and enhancing exports of the country, he added.