Exporters demand cut in refinance rate

SIALKOT: The Sialkot Chamber of Commerce and Industry (SCCI) has urged the government to reduce the mark-up rate to ensure the survival of the export sector.

President SCCI Mohammad Ishaq Butt has said that the high interest rate has increased cost of production due to which Pakistani products have become uncompetitive in the international market.

He explained that industries were already facing a hard time due to the energy crisis, inflation and other problems.

Butt asserted that the present refinance mark-up rate of nine per cent must be reverted to the long-standing rate of three per cent. He added that at present things are much worse than when the refinance facility was introduced and that the government must provide all possible assistance to exporters.

The refinance scheme was started in 1975 as a special incentive to boost exports. Coupled with the rebate on exportable items offered by the government, overseas sales witnessed an increasing trend. The initial mark-up for refinance approved by the government was 2.5 per cent, which was later increased to three per cent and remained constant for a number of years.

According to Butt, the reasonable refinance rate greatly helped the export sector and funds were used for up-gradation and development of industry. However, all of a sudden the rate was increased to 13 per cent which had a devastating impact. As a damage control measure, the government slashed the rate.

Published in The Express Tribune, July 28^th, 2010.