The world is witnessing a global recession causing great slow down in world economies and many countries have cut down interest rates to stimulate acceleration in their economic activities. However, in Pakistan, instead of facilitating trade and industry to boost the economic activities, SBP had further hiked the discount rate by 2 percent raising it up to 15 percent which is proving biggest hurdle in the smooth growth of business activities. Therefore, business community strongly demands that government should bring down mark up rate to single digit level so that traders and industrialists could promote business activities without facing many problems and could play more effective role in steering the economy out of troubled waters. This was said by Mian Shaukat Masud, President, Islamabad Chamber of Commerce and Industry in a statement.

ICCI President said trade and industry was already facing lot of problems due to hike in gas and electricity charges which has sufficiently raised cost of doing business in Pakistan while the high interest rate was not only creating troubles for industrial concerns, it was also making Pakistani goods uncompetitive in the global market. He said due to spike in production cost and high mark up rate, a large number of industrial concerns have already closed down their operations as they could not pay back the loans they got on low interest rates. He said that country is experiencing an increasing gap in trade and demanded that SBP should bring down mark up rate to below 10 percent to promote business activities which will also lead to enhancement of exports as boost to exports is the only best option for the country to control the rapidly widening trade deficit.

Providing a comparison, Mian Shaukat Masud said that the existing15 per cent policy rate in vogue in Pakistan has no parallel in the world as in India the policy rate is 6.5 per cent, China 6.93, United States 1.5 per cent, Europe 3.75, Canada 2.5 per cent and in UK it is 4.5 per cent. He said the banks world over charge from 3 to 5 per cent on policy rates from the entrepreneurs, however, the bank markup for businessmen in Pakistan ranges from 18 to 20 per cent while their counterparts in India and China obtain same amount at 9.5 to 11.5 and 9.9 to 11.9 respectively. Thus they enjoy an advantage of around 10 per cent in markup over Pakistani entrepreneurs making the local merchandise uncompetitive in the global market. He suggested that by involving all the Chambers in the country in consultation, SBP should evolve long-term policies for extending loans to the business community at affordable mark up rate as history that a large number of businesses have fallen prey to short-term and ad hoc policies. He said the mark up rate on long term & short term industrial loans had reportedly registered an increase of 70 to 80 per cent resultantly these loans are now being extended at 18 to 20 per cent which is badly crippling industrial activities in the country. He said at a time when our big neighbors are extending loans to its industry at 9.5 to 11.5 percent markup, how the Pakistani industrialists could compete them in the global market. Therefore, he demanded for taking immediate measures to facilitate the smooth growth of trade and industry before the situation would get out of hands and economic turnaround would become a dream.