Islamabad, 14 Oct 2023: In a pivotal meeting at the Islamabad Chamber of Commerce and Industry (ICCI), industrialists underscored the imperative of reducing the current policy interest rate to stimulate industrialization and accelerate the economic revival of Pakistan, according to a press release from the ICCI. Faad Waheed, assuming the role of Acting President ICCI, and Muhammad Ahmed Waheed, President of the Islamabad Industrial Association (IIA), led the discourse, pinpointing the 22 percent policy interest rate as a formidable barrier hindering industrial progress, investment enhancement, and export growth, while underscoring the comparative struggle faced by Pakistani industries given significantly lower interest rates across Asian nations.
Faad Waheed, in his address to an IIA delegation, highlighted the significant gap between Pakistan’s policy interest rate and those of other Asian nations, such as Japan (-0.1%), Taiwan (1.88%), and Thailand (2.5%), implicating the elevated rate as a factor contributing to the diminished competitiveness of Pakistani industry on an international scale. Furthermore, the lack of export growth to desired levels was attributed to these financial constraints, with a call for an export-driven economic recovery strategy buttressed by a more feasible, single-digit interest rate.
Conversely, Muhammad Ahmed pointed out the downturn in bank net lending to Pakistan’s private sector – recognized as the economic growth engine – noting a drastic 90 percent drop during the initial 10 months of the current fiscal year. This financial constriction, he remarked, has not only stunted growth in numerous industrial sectors but has also made it exceptionally challenging for small and medium enterprises to secure bank credit, thereby stalling expansion. He urged the government to address the significant issue of the high interest rate to pave the way for business growth and investment in the nation.
Engr. Azhar ul Islam, Vice President ICCI, highlighted an additional concern regarding new investments in the federal capital. A notable interest has been observed from investors wanting to establish industries in the region. However, the absence of a new industrial zone has deterred these potential investments. He emphasized that governmental cooperation in establishing a new industrial estate in the region is paramount, predicting it would yield multifaceted economic benefits.
The discussions at ICCI represent a concerted call from industrial sectors for governmental evaluation and adjustment of the current policy interest rate, underlining it as a crucial element in facilitating industrial growth, fostering investments, and steering the nation towards economic recovery and stability.
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