Uncompetitive businesses

With costs 34% higher than peers, Pakistan needs stable taxes, cheaper energy and real policy certainty

It is a foregone conclusion that Pakistani products are uncompetitive in international markets, and the slump in exports is one of the main reasons behind the economy not taking off. It is thus fitting for the Pakistan Business Forum to call upon the government to act on a war footing and come up with a long-term policy prescription to stem the rot.

According to the Forum, the cost of doing business in Pakistan is 34% higher than that of its neighbours and regional states, which pushes the entire gamut of the economy on a slippery note as industries, entrepreneurs and start-ups struggle to stay afloat, having been cowed down at the hands of exorbitant energy prices, illogical and lopsided taxation and an uncertain exchange rate.

Pakistan's biggest problem is ad-hocism and a lack of transparency in policy affairs. Until and unless there is a rational taxation mechanism, low-interest-rate-based borrowing, adequate infrastructure and adequate availability of raw material, coupled with a sound logistical circumference, no business can remain tenable at home and competitive abroad.

With electricity soaring to Rs56 per unit and oil and gas being imported at a skyrocketing dollar-rupee parity, nothing can help businesses stand on their feet. Thus, exports have stagnated since 2022 despite global trade recovery in several sectors.

The situation is so alarming that recently the FPCCI called for declaring an 'investment emergency'. FDIs are on a downturn, and no promising investor is taking Pakistan's route. Moreover, many of the sitting big-ticket businesses have called it a day, complaining of a lack of a conducive environment, harassment on the part of taxation officials, pestering political instability and poor law and order.

A rescue and rehabilitation strategy is indispensable to save the industry from extinction. As immediate remedies, an unbiased and business-friendly tax and interest rate policy is desired. Likewise, strong legislative recourse with rapid justice to litigations is a must to stir confidence among investors.

Last but not least, scaling down of energy prices and the government merely acting as a watchdog rather than a party are the ways to go.