Industrialists criticise minor fuel price cuts as insufficient

Industrialists and traders have sharply criticised the minor reduction in petroleum prices announced by Prime Minister Shehbaz Sharif on the eve of Independence Day, deeming it insufficient to address the economic challenges they face.

The recent reductions of Rs8.47 per litre for petrol and Rs6.7 per litre for diesel, approved by the prime minister on August 13 as a goodwill gesture for August 14, were dismissed by business leaders as inadequate. They argue that the cuts do little to offset the overwhelming costs of doing business, which have been exacerbated by soaring inflation, currency depreciation, and high-interest rates.

Small traders and industries, already operating on razor-thin margins, see the decrease as negligible in comparison to the escalating costs of raw materials, logistics, and production. Retail businesses, struggling with weak consumer demand, are unlikely to benefit from the minor price cuts.

Business leaders suggest that the government should introduce targeted subsidies for energy-intensive industries, reform tax policies to ease the burden on small businesses, and ensure a stable energy supply at affordable rates. Streamlined regulations that foster ease of doing business, particularly for small and medium enterprises (SMEs), are also recommended. Such measures, they argue, would create a more conducive environment for industrial growth, protect jobs, and revitalise economic activity across the region.

The ongoing challenges with foreign exchange reserves, despite positive announcements by the State Bank of Pakistan (SBP), continue to negatively impact imports. Pakistan's heavy reliance on imports, from raw materials to oil and consumer goods, complicates the economic landscape, driving up prices. The low demand for products and commodities further exacerbates the situation, leading to a vicious cycle where production costs rise and economies of scale are diminished. In this context, every cost reduction is crucial. However, industry leaders doubt that the recent decrease in petroleum prices will significantly benefit industrial growth, viewing it more as a gesture to induce a feel-good factor in the country.

Majyd Aziz, an eminent industrialist and former President of the Karachi Chamber of Commerce and Industry stated that substantial reductions in infrastructure costs would be welcomed in a normal economic environment. However, in Pakistan's current climate, such reductions seem unlikely without addressing fundamental issues like revisiting Independent Power Producers agreements, curbing wasteful expenditures, and tackling corruption in utility services.

Muhammad Farooq Shaikhani, President of the Hyderabad Chamber of Small Traders and Small Industry, echoed these concerns. He stressed that while the fuel price reduction may offer slight relief in transportation and energy costs, it fails to address the deeper economic hurdles impeding industrial growth. He advocates for more robust economic reforms, including stabilising energy prices and supporting small industries, to truly revitalise the business environment.