HIGH COST OF DOING BUSINESS IS FORCING INDUSTRIAL UNITS TO CLOSE THEIR OPERATIONS – ICCI PRESIDENT

High cost of doing business due to phenomenal spike in energy tariff and withdrawal of subsidy on electricity and gas is causing slump in economic activities in the country while squeezing purchasing power of consumers on account of high inflation has put the survival of many trade and industrial units in danger, stated Muhammad Ijaz Abbasi, President, Islamabad Chamber of Commerce and Industry while commenting on present uncertain economic scenario in the country due to political and other factors.

ICCI President said the current volatile situation in the country is discouraging the promotion and growth of business activities as over 30 small and medium steel re-rolling units in Karachi have shut down their operations because of slack construction work across the country due to rising prices of construction material including steel products. He said about 30 sectors are linked with construction industry and slump in construction activity will negatively impact the performance of all these sectors, rendering thousands of people jobless. To remedy this situation, he stressed upon the government to bring down electricity and gas tariff for stimulating economic activities in the country.

Muhammad Ijaz Abbasi said that 5 percent Federal Excise Duty (FED) and increase in Sales Tax from 15 percent to 16 percent is also affecting business activities. Quoting an example, he said the current auto sales figures reveal that local cars sales has declined by 55 percent to 4,744 units in July as compared to 10,516 units during the same month of last year and 13, 967 units sold in June 2008 and added that the main cause of this sharp decline is the levy of 5 percent FED, increase in GST by one percent and fixed rates of withholding tax. He said the current turmoil in the automobile industry has claimed jobs of around 150,000 workers, mostly from auto-vending industries which are now operating at around 40 per cent of their installed capacity due to rise in prices of steel and energy. He stressed upon the government to revise downward FED and GST to bail out the auto industry from the current difficult situation.

ICCI President said oil prices in international market are on the decline but government has not passed on this benefit to the general public. He said people as well as business and industry are facing problems due to rising inflation and high cost of production and called upon the government to immediately pass on the benefit of declining oil prices to the people by bringing down prices of oil products to provide some relief to general public and to promote the growth of economic activities in the country.