Business community expresses concerns over rupee devaluation, interest rate hike


KARACHI: The business community has expressed concerns over massive fall in rupee value and significant rise in interest rate.




Saleem Parekh, President, SITE Association of Industry, Karachi, shows his deep concerns on rupee devaluation.

He said that frequent devaluation is disturbing the entire system and inflation is going unbounded and no strings can be attached to control the inflation.

He said that industries have not fully recovered from previous devaluation and this devaluation would affect in the most severe manner as the raw materials would suddenly become very expensive.

In addition, interest rates increased by 1.5 percent would make industries further non-competitive, as investment will go towards money markets and bank deposits; and banks would lend even more to government rather to industries and corporate sector.

He added that, Increase in interest rate would further deter investment in import substitution industries.

As a result of increase in interest rate inflation would further increase. Industries and general public are already suffering from shocks of previous utility costs increase and devaluation.

Parekh said that SITE Association of Industry has suggested government at different platforms to prepare a comparison chart of regional economies for evaluation of cost of doing business.

Also a thorough study of import substituting industries needs to be conducted for making a policy framework to encourage investment in industrial sector.

Operating a business in Pakistan is becoming a nightmare and my question is how one can run a factory against inflationary pressures and exchange rate uncertainty? How industry can be sustainable in this scenario?

He said that these kinds of steps would further result in de-industrialization which is certainly not the manifesto of this government. He pointed that as per recent report of Pakistan Banking Council, manufacturing sector contribution has gone down from 17.5 percent in 2005 to 12.1 percent in 2018.

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