PIAF for concrete steps to attract investment to save jobs
The Pakistan Industrial and Traders Association Front (PIAF) has asked the government to take concrete steps to attract foreign investment, saving the livelihood of millions of workers associated with various sectors, as foreign investment in Pakistan’s long-term projects like power plants, oil and gas exploration and 3G/4G internet has dropped to just $120 million in May 2020.
PIAF chairman Mian Nauman Kabir, in a joint statement with the senior vice chairman Nasir Hameed and vice chairman Javed Siddiqi, observed that the government will have to make visible reduction in taxes in the budget to help revive the businesses, which are near to bankruptcies owing to prolonged worldwide lockdowns amidst coronavirus.
He said that like the domestic industry Covid-19 crisis has also forced the global investors to put their new investment plans on hold, foreign direct investment (FDI) was 10% lower than the $133.2 million recorded in April 2020 and 53% lesser than the $254 million registered in May 2019.
He said there is no visible improvement in employment a month after the business activities were allowed and countrywide lockdown eased. The small and medium industries (SMEs) -the main providers of jobs are still struggling because of lack of funds and demand.
PIAF chairman said that the larger industries are also operating partially. Textile sector that was the major provider of permanent and daily wage jobs has lost 50 percent of both domestic and export market. The auto sector is operating at less than half capacity. The job losses at the original equipment manufacturers not significant but at auto venders, where bulk of auto-related jobs exist are operating with minimum possible staff.
According to reports, in the 11-month period, the power sector got the largest investment of $749.6 million, followed by the communication sector $583.8 million, oil and gas exploration $275.9 million, financial business $256.8 million and electrical machinery $153.4 million.
The communication sector, mostly the 3G/4G service providers, attracted the largest foreign investment of $73.5 million in May 2020, followed by oil and gas exploration firms $18.6 million and financial businesses $15.5 million.
Mian Nauman Kabir said that the global lockdown imposed to contain the virus badly impacted economic activities, businesses, people’s income and their purchasing power. As a result, the demand for many products, except for food and pharmaceuticals, dropped sharply. Most of the foreign investment during the Covid-19 pandemic went to the ongoing projects in Pakistan.
The revival of demand for products like cement, textile and chemical would attract foreign investment in future, he said. The financial health of companies around the globe is deteriorating. Many of them are filing for bankruptcy. The return of stability to the financial health of global firms is a must to attract new foreign investment in Pakistan.
PIAF senior vice chairman Nasir Hameed said that with a view to save the economy from the impacts of the slowdown due to the COVID-19 the government should announce special incentives for a cash-strapped SMEs, which represents more than 90 percent of around 3.2 million business enterprises in Pakistan, contributing 40 percent to the GDP, employing more than 80 percent of non-agricultural workforce, and generating 25 percent of export earnings.
PIAF vice chairman Javed Siddiqi, expressing dissatisfaction over the financial packages announced so far by the government for industry to deal with the challenges posed by coronavirus, called for a significant cut in import duties and waiver of sales tax, income tax and additional income taxes which are still being charged in this time of grave crisis.