Reduction in energy, input costs to raise income, create jobs: PBC chief’s plea to Umar

CEO of Pakistan Business Council (PBC), Ehsan Malik has expressed his belief that jobs can be created and disposable incomes can be enhanced by bringing energy and other input costs down. In a letter to Federal Minister for Finance, Asad Umar, he supports energy tariffs that reflect cost, promote conservation and direct the use to more productive objectives. Therefore, he notes with concern the newspaper reports regarding the proposed recommendation to increase gas prices for all consumers, including industry.

“As you are aware, our export industry is already handicapped with energy costs that are twice those of other countries in the region,” he wrote. PBC’s CEO alerted that the 26% reported increase in gas tariffs for industry would render exports even less competitive at a time when it was essential for Pakistan to bridge the balance of trade. At the same time, import substitution, the other imperative would suffer a setback.

He wrote that job creation is the government and PBC’s top priority. Pakistan is experiencing premature deindustrialisation. Jobs have been lost, as has the share of world exports. Besides other factors, high input costs, of which energy is a component, have contributed to undermining industry.

“The PBC believes that jobs can be created and disposable incomes can be enhanced by bringing energy and other input costs down,” he wrote in the letter to the Finance Minister. Malik asserted that levelling the tariffs for domestic and industrial users would help vitalise industry and promote Make-in-Pakistan. Pending this review, he urged, that export rebates be reviewed urgently to offset the higher cost of gas.

The Gas Infrastructure Development Cess (GIDC) has been a major issue for industry since it was first imposed in 2015. Industry views this Cess as illegal and has taken recourse to the Courts, where the issue is still pending.

“The GIDC legislation has created uncertainty which is hampering fresh investment as well as threatening the viability of existing industries where gas is a major component of the cost,” he wrote. He said that the PBC appreciates the commitment of the government to the Make-in-Pakistan initiative and therefore requests it to withdraw the GIDC legislation at the earliest.

Published in The Business Recorder