Mian Zahid Hussain, a prominent business leader and the Chairman of the National Business Group Pakistan, has called on the government to remove the barriers that hinder business operations and drive economic growth. Speaking as the President of the Pakistan Businessmen and Intellectuals Forum and the All Karachi Industrial Alliance, Hussain stressed the need for urgent reforms in the country’s business environment to ensure sustainable economic stability.
Hussain emphasized that while reducing interest rates is a positive step, it is not enough to foster long-term economic growth. According to him, the government must take comprehensive measures to improve the overall business climate. “Along with lowering interest rates, the government needs to eliminate obstacles in the way of businesses, ensure law and order, and expedite reforms in underperforming state institutions,” Hussain said. He also pointed out that improving the country’s laws and streamlining the regulatory environment will play a significant role in supporting business activities.
The business leader underscored that economic stability cannot be achieved without political stability. He stressed that the government must focus on key economic sectors, with particular emphasis on agriculture, as a priority. Hussain highlighted the country’s dependency on imports and called for measures to reduce foreign exchange outflows. For instance, he noted that Pakistan spends approximately four billion dollars annually on importing palm oil, a cost that could be reduced by finding alternative solutions. Similarly, he pointed out that if cotton production in the country could meet domestic requirements, the textile industry could source cheaper raw materials and reduce its reliance on imports.
However, the situation surrounding cotton production in Pakistan is concerning. The country has seen a consistent decline in the area under cotton cultivation, which is forcing the textile industry to depend on imported cotton. This not only increases the industry’s cost base but also results in the country spending billions of dollars each year on raw material imports. Hussain called for targeted efforts to reverse this decline and restore cotton production to levels that can sustain the local textile sector.
On the subject of interest rates, Hussain welcomed the recent reduction in the policy rate by the State Bank of Pakistan (SBP), marking the sixth consecutive cut since April 2024. While he acknowledged that the 1% reduction is a step in the right direction, he expressed concerns that the pace of rate cuts is too slow. The current interest rate stands at 12%, and Hussain pointed out that while the reduction is appreciated, it does not go far enough given the country’s improving economic conditions. “The business community is disappointed with only a 1% reduction, and we believe that a more substantial decrease of 4% is necessary to stimulate industrial and business activities,” he said.
Hussain also drew attention to Pakistan’s interest rates, which remain significantly higher than those in neighboring countries. In Sri Lanka, India, and Nepal, interest rates are in the single digits, while in Bangladesh, they stand at around 10%. Pakistan’s interest rate, on the other hand, is still in double digits, which, according to Hussain, continues to impede business growth and industrial development. “If Pakistan’s interest rates were to match those of our regional counterparts, it would have a profound positive impact on businesses, leading to increased GDP and job creation,” he added.
While inflation has recently shown signs of easing, and other economic indicators are improving, Hussain cautioned that global commodity price fluctuations and rising food prices could pose challenges to maintaining this positive momentum. Nevertheless, he remains optimistic about further reductions in inflation, which could create the conditions for additional interest rate cuts. Hussain emphasized that the central bank should take advantage of these favorable economic conditions and reduce interest rates further to stimulate business activity and boost economic growth.
In conclusion, Mian Zahid Hussain urged the government and the central bank to act decisively in addressing the economic challenges facing Pakistan. By removing barriers to business, making bold reforms, and reducing interest rates, Pakistan can create a more favorable environment for investment, increase employment opportunities, and ultimately improve the overall economic outlook. He stressed that a strong commitment to reform and an ambitious approach to policy changes are key to unlocking the country’s full economic potential.