APBF demands loans at 3% mark-up for SMEs

Forum president also calls for significant cuts in import duties, tax waiver

LAHORE: The All Pakistan Business Forum has urged the central bank to announce a soft loan with a maximum mark-up rate of 3%, especially for SMES to bailout their struggling businesses.

The forum expressed concerns over the insufficient cut of just 1% in the key policy rate to 8%, in a statement issued Saturday. APBF President Syed Maaz Mahmood also expressed dissatisfaction over the financial packages announced by the government for the industry to deal with the challenges posed by the coronavirus. He called for significant cuts 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.

Mahmood asked the government to take concrete steps to keep the industrial wheels running especially of SMEs, to save the livelihood of millions of workers associated with the small industries.

The president observed that mere statements would not work unless solid measures are taken by the government including a sizable reduction in fuel prices, bringing down key policy rate to 3%, regionally competitive energy rates and a substantial cut in duties and taxes or a complete waiver at least in these critical circumstances.

Mahmood further criticised the seaport terminal authorities and shipping lines for rejecting the recommendations of the government to relax detention cost, besides extending the free period at terminals for charging demurrage owing to the closure of businesses, amidst prolonged lockdown in the country.

APBF National Board Member and CHT Pakistan Managing Director Haroon Ali Khan observed that the biggest challenge these days is cash flow management.

“We should keep our focus on support for cash flow management for SME sector and the government may prioritise its incentive preferences under the growth and importance for the economy,” he added. He suggested that the authorities should reduce sales tax from 17% to at least 10% to improve demand generation, besides announcing interest-free loans to pay employees’ salaries.

APBF Chairman Ibrahim Qureshi said that 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% of around 3.2 million business enterprises in Pakistan, contributing 40% to GDP, employing more than 80% of non-agricultural workforce, and generating 25% of export earnings.

Published in The Express Tribune, May 17^th, 2020.

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