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Industrial sector calls for interest rate reduction to boost production


Industries in Pakistan demand lower interest rates to boost production and exports

ISLAMABAD: A delegation from the Islamabad Industrial Association (IIA), headed by its President Muhammad Ahmed Waheed, paid a visit to the Islamabad Chamber of Commerce and Industry (ICCI) today.

During the meeting, the delegation congratulated Faad Waheed on his recent appointment as the acting president of ICCI.

Addressing the delegation, Faad Waheed, Acting President of ICCI, expressed concern about the current policy interest rate, which stands at 22 per cent. He said that this high rate poses a significant obstacle to the growth of industrial activities in the region.

Waheed urged the government to consider reducing the interest rate to a single-digit level. Doing so, he argued, would promote industrialisation, attract investments, boost exports, create employment opportunities, and ultimately revitalise the economy.

Highlighting the disparity between Pakistan’s interest rates and those of other Asian countries, Waheed pointed out that Pakistan faces a much higher rate compared to Japan (-0.1 per cent), Taiwan (1.88 per cent), Thailand (2.5 per cent), Malaysia (3 per cent), China (3.4 per cent), Vietnam (4.5 per cent), Indonesia, Hong Kong (5.75 per cent), Bangladesh, and India (6.5 per cent).

This disparity, he noted, hampers Pakistan’s competitiveness in the international market and hinders export growth.

Muhammad Ahmed, President of the Islamabad Industrial Association, underscored the vital role of the private sector in driving economic growth. He lamented that lending to the private sector by banks in Pakistan had plummeted by 90 per cent during the first ten months of the current fiscal year.

This drastic decline, he argued, has led to negative growth in various industrial sectors. Small and medium-sized enterprises (SMEs), in particular, are finding it exceedingly difficult to obtain credit at the prevailing high interest rates, hindering their expansion.

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Moreover, Ahmed highlighted that the high interest rate serves as a significant barrier to attracting new investments in Pakistan.

He called upon the government to urgently address this issue, thereby facilitating the growth of businesses and investments in the country.

Engineer Azhar ul Islam, Vice President of ICCI, added that potential investors are eager to establish industries in the federal capital. However, the absence of a new industrial zone has thwarted their efforts to make new investments.

According to APP, he urged the government to extend full cooperation to ICCI for the establishment of a new industrial estate in the region. Such an initiative, he emphasised, would yield manifold benefits for the national economy.

The delegation’s visit underscored the urgent need for policy reforms, especially in the areas of interest rates and industrial infrastructure, to enhance Pakistan’s industrial growth and economic prospects.

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