Leaders of Lahore Chambers of Commerce and Industry have urged the State Bank of Pakistan to bring down the markup rates to a single digit for encouraging the industries to take out loans to expand their operations.

LCCI President Irfan Iqbal Sheikh, Senior VP Ali Hussam Asghar, and VP Zahid Jawaid Ahmad said that lower markup rates make it cheaper to borrow for the industrialists.

They also said that high cost of borrowing is discouraging the demand for credit by the private sector and slowing down the economic activities.

The LCCI leaders said that reduction in markup rate from existing 13.25% to single-digit would be a great favour to the industrial sector.

It would help the government to attain the target of industrial growth, would reduce the cost of production and would also bring capital of the banks into circulation, they added.

“Markup rate influences the cost of product. Pakistani manufacturers cannot compete in the international market with those countries’ industrialists who are getting capital on zero or less than one percent markup rates from their governments.”

The LCCI office-bearers stated that policy rate was increased to 13.25 in July 2019 as compared to 6.5% in May 2018. The sharp increase in interest rate pushed up borrowing cost that retarded investment, capacity generation and hence exports, they added.

They were of the view that the tight monetary policy stance had always proved a big blow to the industrial sector.

“We have to move forward quickly, as like other countries of the region, to make Pakistan a hub of manufacturing activities and heaven for investors.”

They urged the State Bank to announce at least 400 basis points cut in markup rates in the upcoming monetary policy.