Eid sales disappoint traders

Political uncertainty, new taxes blamed for dampening purchasing power

KARACHI: Despite improving security situation in the country, traders say this year’s Eid sales have failed to meet their expectations, mainly because of the political uncertainty emanating from Panama Papers leaks and the imposition of new taxes that squeeze the purchasing power of shoppers.

Traders, especially those that track the wholesale markets of Karachi from where imported goods are supplied to all parts of the country, say this year’s seasonal sales were down by 40% compared to last year.

According to estimates of All Karachi Tajir Ittehad Chairman Atiq Mir, Eid sales during Ramazan were not more than Rs50 billion, down 40% from the estimated sales of Rs70 billion last year.

“Customers did come to markets this year, but their budgets were very limited compared to last year. Something was different this year. It seems the purchasing power of customers has shrunk due to multiple factors that may include unemployment, imposition of new taxes, increase in cost of living...,” commented Mir.

Expectations vs reality

Some of the traders, including wholesalers and retailers, were expecting an increase in sales this year due to overall better security environment in the country, especially in Karachi that was directly or indirectly linked with thousands of markets in different parts of the country.



However, Mir said the sudden rise in street crimes, a high-profile kidnapping and targeted killing in Karachi badly dampened confidence of the customers in the last 10 days of Ramazan.

The on-going Karachi operation has considerably improved the security situation since 2013, however, traders and business people believe the city is yet to touch its full business potential.

This year some were anticipating even better Eid sales, but the target killing of renowned qawwal Amjad Sabri in the third week of Ramazan proved damaging, especially for those who invested billions of rupees for this season.

“According to the responses that we have received from different markets,” Mir added, “we can safely say that up to 40% of goods that were imported or prepared for this season remained unsold.”

“I believe one of the biggest factors for low sales was the political uncertainty that has gripped the businesses for the last few months. The opposition is mounting pressure on the government over Panama Leaks that has forced traders to take a cautious approach for Eid investment decisions,” Sindh Tajir Ittehad Chairman Jameel Paracha told The Express Tribune.

Karachi-based Paracha, who deals in readymade garments, said he used to get orders from Punjab until the last day of Eid, but this year his partners stopped ordering garment consignments much earlier due to low demand.

He also blamed the withholding tax on banking transactions of over Rs50,000 for low Eid sales this year.

Paracha said traders and businesses were now banking on better Eidul Azha sales to get returns on investments they made for this Eid.

“We have received average business reports on this Eid season,” said All Pakistan Anjuman-e-Tajran Central General Secretary Naeem Mir, a Lahore-based trader, who led the traders’ faction that supported the new amnesty scheme in February.

“I believe business sentiments in Punjab were normal and the province has remained relatively calm in recent months as far as security is concerned,” Mir added.

Commenting on why people were avoiding banking transactions, he said people were dealing in cash for months to avoid the withholding tax on transactions exceeding Rs50,000.

“This is not a problem for traders anymore. For them, dealing in cash, is the right alternative,” he added.

Published in The Express Tribune, July 9^th, 2016.

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