Lower energy costs or risk collapse: KCCI

KARACHI: President of the Karachi Chamber of Commerce & Industry (KCCI) Iftikhar Ahmed Sheikh issued a strong statement on Friday, urging the government to revisit its economic policies to avert a looming crisis.

He highlighted several concerns, including highly unjust taxation measures and exorbitant energy tariffs, which he blamed for declining exports, business closures, and widespread hardship.

Sheikh emphasized the urgency of the situation. “The alarming situation calls for extensive relief measures on a war footing,” he stated, warning of potential social unrest if businesses continue to suffer. He expressed fear that “the jobless and poor segment of society with empty stomachs” could take to the streets, creating further challenges for the government.

Sheikh’s concerns stem from numerous meetings with frustrated business owners. “We have never seen so many complaints, demotivation, and depression,” he revealed. Many business owners are considering closing down operations or reducing production, leading to widespread layoffs. This, according to Sheikh, would only exacerbate the economic crisis.

He specifically criticized the recent imposition of a 2.5 per cent advance income tax on unregistered retailers. He termed it an arm-twisting tactic that disrupts the FMCG sector by forcing them to act as withholding agents.

Sheikh demanded its immediate withdrawal, citing reports that 60-70 per cent of FMCG goods supplied to unregistered retailers are being returned due to the new tax. This, he argues, raises costs, plummets sales, and weakens overall demand. Sheikh further emphasized the plight of small traders and industrialists already struggling with “excessively high gas and electricity tariffs”. He questioned the sustainability of businesses with electricity costing 18 cents/kWh and gas reaching Rs3,000 per MMBtu. He criticized the government for failing to honour promises of lowering electricity tariffs and raising fixed charges instead.

Expressing some optimism, Sheikh mentioned an upcoming meeting with the chief executive of K-Electric. He hoped the meeting would address issues faced by small traders, particularly the excessive load shedding plaguing Karachi’s underprivileged areas during the scorching summer.

Sheikh called for a dedicated helpdesk at the KCCI to assist small traders and requested leniency regarding load shedding during the heatwave.Beyond energy costs, Sheikh highlighted the crippling impact of inflation on businesses. He lamented the declining purchasing power of consumers, making it difficult for companies to break even.

He also condemned the unbridled discretionary powers conferred upon FBR officials, accusing them of using these powers to implement draconian and arm-twisting measures that threaten businesses on the brink of bankruptcy.

Finally, Sheikh addressed the ongoing negotiations with the IMF. He pointed out that while the IMF’s 37-month Extended Fund Facility of $7 billion provides Pakistan with $2.3 billion annually, strict conditions could lead to an export loss exceeding $4 billion.He questioned the logic of this trade-off and urged the government to prioritize domestic businesses over potentially detrimental IMF demands.