KARACHI: The business community has rejected the recent price hike for petroleum products and called on the government to immediately withdraw its decision, a statement said on Saturday.
The Pakistan Federation of Chambers of Commerce and Industry (FPCCI) businessmen panel, while rejecting the massive increase of up to 5.92 rupees / liter, urged the government to withdraw its decision, because this decision will hit the industry hard.
The Chairman of the FPCCI Businessmen’s Panel, Mian Anjum Nisar, said that the government puts the burden of soaring oil prices in the international market immediately on the masses, but the process of reducing prices is still very slow, he said.
Pakistan’s economy, especially small and medium-sized enterprises (SMEs), is struggling to cope with the post-coronavirus economic crisis and is in need of support. Instead of granting subsidies or waivers, it is unfair to overburden industries with rising costs of production.
An increase in the costs of petroleum products will further weaken the economic environment, already threatened on several fronts.
Nisar said that it is undeniable that oil rates have increased in the international market, but that the government, instead of passing this increase on to the public, can reduce the number of taxes on petroleum products because fuel is the engine of growth.
If fuel were heavily taxed, the whole economy would suffer in an unprecedented way, he said, adding that gasoline and high-speed diesel are the two main products that generate most of the fuel. government revenues due to their massive yet growing consumption in the country
Average gasoline sales reach 750,000 tonnes / month against a monthly consumption of around 800,000 tonnes of fast diesel.
The economy was already in a precarious situation and this constant back and forth will only increase volatility, instead of stability, he added.
He said the cost of doing business and the cost of production have reached a level of non-competitiveness. The cost of borrowing was enormous and the financing of the capital became more expensive.
Nisar said Pakistan’s exports cannot compete with China, Bangladesh and India, where electricity tariffs are between 7 cents and 9 cents, especially in the post-coronavirus economic downturn, because The country’s exports have seen a major setback these days due to the high cost of electricity, which has become a major obstacle to industrial development and boosting exports.
He said fuel and electricity are seen as the lifeline of any economy and play a central role in the socio-economic development of a country.
Nisar said industries need low-cost energy to reduce their production costs, keeping their products competitive in the international market. He said the government, under the current circumstances, should reduce the price of electricity as well as lower the prices of petroleum products to lower the cost of doing business and promote industrial activities.
Due to the Covid-19 pandemic, business activities were already in decline and in this situation the government should take serious steps to reduce the cost of doing business, as a rise in oil prices would further increase the cost of production. , making transport more expensive.
In a bimonthly review of petroleum products for the second half of September, the price of gasoline was increased by Rs5 / liter. The new gasoline price is Rs123.30 / liter, which was Rs118.30 / liter, showing an increase of 4.2%.
Nisar said that in order to improve business cash flow at this critical time, the government will need to ease the industry by lowering the tax rate on all items, including petroleum products, in addition to lower the mark-up rate.
At a time when the country’s GDP ratio was very low, amidst the high cost of doing business, the industry needed maximum support and relief.
Former FPCCI chief and BMP chairman said high-speed diesel is mainly used in transport and agriculture sectors; therefore, any increase in its price will result in an inflationary impact. The price of light diesel has also been increased, which is used in industries.