Traders warn of inflation, industrial slowdown

KARACHI: Businessmen and traders on Thursday slammed the introduction of supplementary budget, which they said would not only burden the common man in the form of price hike but would also affect industry in terms of slowing down the growth.

Terming the supplementary budget a disaster for the economy, trade bodies said withdrawal of exemptions on raw materials would have a strong negative impact on the manufacturing sector.

Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Vice President Nasir Khan said the mini budget would bring more inflation as exemptions on various items as well as raw materials would be an added burden on the common man.

Calling the mini budget a disaster for industry, he said it would promote smuggling as costly manufacturing of goods would push consumers to cheaper-smuggled goods.

“For instance, smuggled cooking oil was available due to high prices of locally producededible oil,” he pointed out, adding that more goods would be added to this list due to price hike, leading to a negative impact on industrial activities.

Zubiar Motiwala, former president, Karachi Chamber of Commerce and Industry (KCCI) said, “The government, for a billion dollars from the IMF (International Monetary Fund), is going to pocket $2 billion in the form of withdrawal of exemptions worth Rs350 billion.”

This decision would create a new wave of inflation, which would destroy the people’s purchasing power, he pointed out, adding that withdrawal of exemptions and imposition of duties on raw materials would instead have far reaching impact on both industry and trade sectors.

Korangi Association of Trade and Industry (KATI) Vice President Farrukh Ali Qandhari also termed the mini budget devastating for the common man and industry.

“The government withdrew exemptions, but did not make any efforts to enhance the tax net,” he said, pointing out that this mini budget was the worst for consumers as the government did not even spare flour mills, something that was never done in the past.

The increase in sales tax, including kitchen items would not only increase prices directly, it would also empower mafias in profiteering.

All Karachi Tajir Ittehad Chairman Atiq Mir said, “Increasing taxes on kitchen items is the go

vernment’s worst bet for whatever reason, as it will increase inflation and thus give the floor to mafias.”

Internationally prices of precious metals were already high, and the decision to slap 17 percent tax on gold and silver would put an end to the businesses of jewellers.

Inflation on top had already contracted jewellery sales, he added.

“Granted that people do not buy gold jewellery, cell phones or a car often, but raising prices of essentials such as flour and other food items at this point in time when inflationary pressures were at record high, is close to pushing common people to their financial collapse,” he added.

He said the people should all come on the same page to prevent the International Monetary Fund (IMF) from completely taking over Pakistan’s economy, “before it is too late”!

He also took provincial governments to task for patronising mafias in their bid to sabotage the federal government, while the latter was “completely incapable of dealing with such mafias, who are pushing prices of even essentials to new highs”.

Karachi Electronic Dealers Association President Mohammad Rizwan said that a mobile that used to be worth Rs50,000 would now get expensive by Rs8,500. “This government used to brag about ‘Digital Pakistan’… Is this the way they will make Pakistan digital?”

With the erosion of their buying power, people would buy cheaper phones with lower specifications, which means Pakistan would stay “tech backward”, which was in sharp contrast with what the government says when it talks about digitising the country.

He added that mobile sellers might also increase the price of second hand cell phones, where they do not have to pay taxes since the price of new cell phones would go up.