Islamabad Chamber of Commerce & Industry (ICCI) has called upon the government to provide some tax incentives to manufacturing sector by slashing tax rates for boosting up the falling productivity of this sector.

Karim Aziz Malik, Vice President ICCI while exchanging views with a delegation of local manufacturers said that the manufacturing sector, which contributes 20 percent to the GDP, remained under pressure during the year 2009 while the cut in tax rate would facilitate it to recover fast and play an effective role in boosting the economic growth and exports.

He said the annual negative growth of 8.2 per cent in large scale manufacturing shrunk the overall growth of GDP to just two per cent in 2009, which was the lowest growth in the last eight years compared to 4.1 per cent in 2008 and 6.8 per cent in 2007. Therefore, it needs some tangible relief measures from the government to bring it back on track.

He said the manufacturing sector is the main contributor to the total reserves of the national kitty and is paying around 60 per cent share in the overall tax revenue of the government. But several factors including prevailing law & order problems, massive power crisis, high power and gas prices and high markup etc. are badly affecting its performance.

Ahsan Zafar Bakhtawari, ICCI Vice President said the world’s largest economies have flourished by developing and strengthening those manufacturing industries which can produce high value added products with quality production and innovative technologies.

But he lamented that Pakistan has mostly been relying on manufacturing and exports of low value added textile based products. The result is a narrow export base with more than 55 per cent contribution coming from textile products.

He said realizing the shift in world’s economic land-scope, Pakistan should create a strong and diversified export driven manufacturing base by focusing on modernizing and strengthening this sector.

He was of the view that if properly supported by the government, manufacturing sector could become a driving force for economic growth of the country.