The All Pakistan Textile Mills Association (APTMA) has urged Finance Minister Muhammad Aurangzeb to foster an export-centric culture across all sectors of the economy by implementing confidence-inspiring economic policies and meaningful structural changes rather than continue the “downtrodden path of short-term remedies.”
In a letter addressed to the finance minister, APTMA Chairman Asif Inam said that the design of the new IMF program should accommodate the peculiar circumstances where our essential need is to develop and expand exports.
The letter highlighted that exports cannot thrive under prohibitive anti-export policies that have been implemented over the past year and beyond. High taxes and persistent delays in refunds have squeezed out all liquidity from manufacturing sectors that represent only about 20 percent of GDP but are responsible for over 60 percent of tax revenue with as much as 20 different federal and provincial taxes imposed on manufacturing firms.
Adding fuel to the fire, power tariffs for industrial consumers have skyrocketed to over 17.5 cents/kWh—over twice the regional average—while gas prices have also increased by 223% since January 2023, leaving no financially viable source of energy for manufacturing activities in Pakistan, the letter said.
Having learned lessons from past IMF programs, raising of power tariffs beyond affordability has proved completely counterproductive and has been unable to yield the desired effects as power sector circular debt continues to grow, it added.
The letter said that the prohibitive cost of energy has rendered manufacturing activities financially unviable, forcing a drastic reduction in industrial energy consumption.
It said that the focus should be placed on bringing informal sectors into the formal economy and stimulating industrial activity to dilute public debt servicing costs through economic rather than taxing all productive activities to extinction-whether through explicit taxes like income and sales tax, or hidden ones like cross subsidies embedded in power tariffs.
It is important to emphasize that the government must implement confidence-inspiring economic policies and meaningful structural changes rather than continue the downtrodden path of short-term remedies at the cost of medium- and long-term economic growth and align its policies with the needs of a modern, diverse industrial base, one that can compete effectively in international markets, the letter added.