Import substitutes to help cushion inflation impact

Economic experts have called on the government to focus on import substitution and bring the undocumented sector to the tax net in order to cushion the impact of soaring inflation, sparked by the rupee’s devaluation against the US dollar.

They were of the view that those measures would help to mitigate the effects of inflation and stabilise the economy. “We must lessen our dependence on imports as there is an urgent need to manufacture the substitutes of imported goods,” remarked Union of Small and Medium Enterprises (UNISAME) President Zulfikar Thaver. “In this regard, we have approached Pakistan Council of Scientific and Industrial Research (PCSIR) for exploring indigenous resources.”

Thaver pointed out that the council had agreed to support small and medium enterprises (SMEs) and also offered to facilitate entrepreneurs, who wished to produce value-added products like cheese, milk powder, peanut butter, sweeteners and other dairy items. He emphasised that there could be substitutes for tea from lemon grass as well as for edible oil, adding synthetic meat, reinforced and vitaminrich water, beverages and rice as well as rice bran oil could be consumed to save foreign exchange. Other goods are insecticides, pesticides, fumigation products and fertilisers. “PCSIR is keen to do research on different types of paints, enamels, polishes, wall coatings and decorative finishes,” he said. “We have delayed some crucial economic decisions that have burdened the country with around $6 billion, besides losing credibility before investors and lenders,” stated Alpha Beta Core CEO Khurram Schehzad.

Additionally, “we will be paying the cost of skyrocketing inflation, which will be extracted from the poor masses, unfortunately. As a result, petroleum prices will be raised by at least Rs35 per litre while gas price is likely to be hiked by 75% and electricity by 25%,” added Schehzad. Expressing concern, he pointed out that taxes on existing businesses rather than the untaxed real estate, retail and low-taxed products like agriculture, tobacco and beverages were going to squeeze the documented businesses further. “Increased taxes and high interest rates will lead to more layoffs as massive unemployment is expected in the next few months.” UNISAME and PCSIR have planned to manufacture machinery locally and the entrepreneurs desiring to work on a turnkey basis would be facilitated, Thaver revealed. “The council and other stakeholders will hopefully expedite this process,” he hoped.