LAHORE: As the country continues facing a barrage of economic challenges, with businesses reeling from soaring inflation, high interest rates, and ‘inconsistent’ policies, Dr Muhammad Arshad, a former regional chief of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), calls for transformative reforms, urging the State Bank of Pakistan (SBP) and the government to lower interest rates to six per cent for the next five years and introduce an amnesty scheme to rejuvenate the construction industry.

According to him, reducing cost of borrowing is one of the most critical steps needed to stabilise the economy.

“By bringing interest rates down to 6pc, the government can provide much-needed relief to businesses struggling under high borrowing costs,” he argued while talking to a group of journalists here on Saturday.

He highlighted that a low-interest-rate environment would not only stimulate economic activity but also encourage long-term investments in capital-intensive sectors. This, in turn, could create jobs and boost investor confidence across the board.

Historically, he said, high interest rates have discouraged entrepreneurship and stifled growth, particularly in emerging economies like Pakistan. A significant reduction in rates would provide breathing space for struggling businesses and pave the way for sustainable economic growth.

Dr Arshad pointed out that the construction sector is a vital driver of Pakistan’s economy and requires immediate attention. He advocated for the introduction of an amnesty scheme to unlock dormant capital. “Such a scheme should ensure that no questions are asked about the source of investment and must be free from rigid time constraints to foster sustained investor confidence,” he said.

A revitalised construction industry could unleash a significant economic activity, particularly in housing development. Allied sectors such as cement, steel and labour markets would also benefit from this ripple effect, creating a multiplier impact on employment and national output. This sector, which accounts for a significant portion of Pakistan’s GDP, has the potential to kick-start economic recovery if supported through pragmatic policies.

Talking about revival of the textile sector, he said the industry has been hit hard in recent years. High production costs, erratic energy supplies, and policy inconsistencies have hampered its growth. He proposed targeted interventions to rejuvenate the sector, including subsidies for production, guaranteed energy supplies, and incentives for exports.

“Boosting textile production and exports could significantly enhance Pakistan’s foreign exchange earnings and reduce the trade deficit,” he noted.

Given that the textile industry employs millions of workers and accounts for a major share of Pakistan’s export revenue, its revival is critical for overall economic stability.

As Pakistan navigates these turbulent times, the onus is on policymakers to adopt a proactive approach. Reforms must prioritise economic stability, job creation and sectoral revival to inspire investor confidence and foster sustainable growth.

Published in Dawn, December 29th, 2024