Export sector dismayed by govt measures

Businesses say they lack incentives to boost industrial growth, agriculture, employment

KARACHI:

The Pakistan Business Forum (PBF) has expressed concern over several key aspects of the federal budget 2026-27, stating that the budget falls short of delivering the bold and transformative measures required to accelerate industrial growth, enhance exports, revive agriculture, and generate employment opportunities.

PBF President Khawaja Mehboobur Rehman noted that the government has set a target of increasing petroleum levy collection by 18%, a move that raises concerns about continued inflationary pressures instead of providing meaningful relief to consumers and businesses. Higher petroleum-related taxation is likely to keep transportation and production costs elevated across the economy.

The forum said that the budget does not offer significant incentives capable of boosting exports and improving Pakistan's international competitiveness. At a time when export-led growth is essential for economic stability, the absence of strong export-oriented measures represents a missed opportunity.

PBF also highlighted the government's silence on industrial energy tariffs. According to the forum, the industries operating at nearly half of their production capacity cannot be revived without substantial reductions in energy costs. "While the industry was expecting a more comprehensive package to restore competitiveness and attract investment, the relief measures announced remain limited."

However, the PBF welcomed the government's decision to reduce the super tax by 2% and completely abolish the super tax for businesses with an annual turnover of up to Rs500 million. The forum described this measure as a positive and commendable step that will provide relief to a significant segment of the business community, including the real estate and construction sectors.

It also expressed concern over the continued expansion of the undocumented economy. It noted that the size of the cash economy has reportedly increased from Rs9 trillion to Rs12 trillion within a year, describing this trend as a clear indication of policy shortcomings and the failure to adequately document economic activity.

Separately, Ismail Suttar, founder chairman Salt Manufacturers Association of Pakistan has expressed serious reservations about the federal budget 2026-27, arguing that the government has failed to introduce measures capable of delivering a meaningful growth in exports at a time when the country urgently needs foreign exchange earnings.

Suttar said the budget lacked a coherent roadmap for expanding Pakistan's export base and addressing challenges confronting manufacturers. He noted that despite repeated assurances of support for the productive sectors, the exporters have received little beyond marginal tax adjustments.

According to him, one of the biggest disappointments was the government's decision not to restore the final tax regime for exporters. He said the export sector had sought a straightforward tax framework that would minimise compliance costs and reduce interaction with tax authorities.

"Reducing the withholding tax rate while keeping exporters within the normal tax regime does not solve the problem," he observed. "Businesses need predictability and simplicity, not additional paperwork and procedural complications."

Suttar warned that Pakistan's regional competitors were aggressively facilitating exporters through tax incentives, lower production costs and simplified regulations, whereas the latest budget offered no comparable relief.