ICCI for encouraging capital spending to accelerate growth

  • June 16, 2010
Islamabad Chamber of Commerce & Industry (ICCI) has called upon the government to encourage capital spending through positive policy measures to accelerate economic growth of the country.

Chairing a meeting, Mr.Zahid Maqbool, President, ICCI said that currently there is a very limited scope for creating employment, alleviating poverty and putting economy on fast track of growth. He said these problems can only be resolved through a surge in capital spending and investment.

He said government should rationalize tax rates and import duties to facilitate the easy import of those latest plants, equipment and machinery, which are direly needed, but are not available in the country. This approach will greatly improve the productivity of key industrial units, he added.
He said that as per economic survey 2009-10, Gross Fixed Capital Formation (GFCF) has declined by 0.6% as compared to 5.5% increase in 2008-09 while private sector investment has gone down by 3.5 percent, particularly in large scale manufacturing, electricity &  gas and transport & communication sectors.
He said the plunge in GFCF and private sector investment shows that the rate of increase in total value addition in the economy has decelerated despite posting higher than expected GDP growth rate of over four per cent during 2009-10.
He said country has also witnessed 45 percent decline in foreign direct investment as Pakistan fetched FDI of US$ 1.8 billion from July to April 2009-10 as compared US$ 3.2 billion in the same period of FY09.

He said these are not salutary signs for the long-term prospects of the economy and urged that government should immediately address all those issues including energy crisis, high interest rate and security challenges that led to the decline in capital formation and investment in the country, otherwise achieving set targets of economic growth will become more difficult.

He said the government should develop a more investment friendly policy framework and create a conducive environment to attractive enough capital spending and investment from domestic and foreign investors so that growth in all key sectors could be accelerated to put Pakistan on the course of sustainable economic development.