Key Takeaways
- Renowned business tycoon Arif Habib highlights high energy costs and heavy tax burden as major hurdles for investment.
- Habib warns that elevated production costs discourage both domestic and foreign investors, citing Pakistan's competitiveness issues.
- He suggests reducing taxes could lead to positive economic developments in the country.
Renowned business tycoon Arif Habib, Chairman of the Arif Habib Group, has called for urgent action from the government to reduce high energy costs and heavy tax burden in order to attract more investment into Pakistan. Speaking at a seminar held at the Securities and Exchange Commission (SECP), Habib emphasized that these structural challenges are significant obstacles to sustainable economic growth.
Habib stated, 'Presently, Pakistan is facing several problems in attracting new investment into the economy, both from international and local investors. That is mainly because the cost of production is high.' He further explained that electricity prices in the country are significantly higher than those in competing regional economies, making it difficult for Pakistani manufacturers to compete internationally.
The business leader also highlighted the tax burden on businesses, noting that a combination of 29% corporate income tax and 10% super tax, along with other levies, results in an overall tax rate of between 50-60%. 'If energy costs and taxes are reduced, I believe we will see some positive developments in the Pakistan economy in terms of investment,' Habib said.
While acknowledging that the government's fiscal position has improved due to lower interest rates and a smaller budget deficit, Habib pointed out that high energy prices have eroded the competitiveness of Pakistani manufacturers. 'That’s why I think our exports are not growing,' he added, referring to the challenges faced by exporters in competing in international markets.
Habib also noted that Pakistan already possesses significant industrial capacity but remains idle due to weak demand. He suggested that stronger economic activity could enable existing industries to increase output without requiring further investment. 'I believe we will see further improvements in Pakistan’s overall economic environment going forward,' he concluded, expressing optimism about the future.
The business tycoon's comments come at a time when the government is considering approaches such as approaching the International Monetary Fund (IMF) for assistance to reduce taxes on businesses. Habib's call for action underscores the critical need for policy changes that can make Pakistan more attractive to investors and boost economic growth.
'Presently, Pakistan is facing several problems in attracting new investment into the economy, both from international and local investors. That is mainly because the cost of production is high.'
Arif Habib, Chairman of the Arif Habib Group
'If energy costs and taxes are reduced, I believe we will see some positive developments in the Pakistan economy in terms of investment.'
Arif Habib, Chairman of the Arif Habib Group
