KARACHI:

Industrialists, traders, and business leaders strongly criticised the State Bank of Pakistan’s (SBP) decision during its Monetary Policy Committee (MPC) meeting to cut the interest rate by just 1%, urging swift reduction to single digits without any further delay.

Karachi Chamber of Commerce and Industry (KCCI) President Muhammad Jawed Bilwani termed the State Bank of Pakistan (SBP)’s decision to reduce the policy rate by 1%, bringing it down to 11% from 12%, as a positive yet inadequate step towards economic revival.

The cut does not meet the expectations of the business community, which has been persistently calling for a substantial reduction to bring the interest rate down to single digits.

He said the current macroeconomic environment, especially the record-low inflation rate, provides ample of room for a deeper policy rate cut. Referring to Pakistan Bureau of Statistics data, he said, Pakistan’s inflation has dropped to a historic low of 0.3% in April 2025, from 0.7% in March which shows that the real interest rate is excessively high, stifling investment, production, and job creation.

Bilwani said, “We reiterate our demand for a single-digit interest rate regime. Only then can we unlock the true potential of our industrial and export sectors, generate employment, and attract domestic and foreign investment,” adding that KCCI stands ready to engage with policymakers to help shape a more growth-oriented and business-friendly economic framework.

Drawing a comparison with regional economies, Bilwani pointed out that Pakistan’s interest rate remains among the highest, despite having the lowest inflation.

“India’s policy rate is at 6.0%, Bangladesh at 10.0%, Vietnam at 3.0%, and Thailand recently cut its rate to 1.75%. These countries are actively supporting their business sectors, while Pakistani industries continue to suffer under unsustainably high borrowing costs,” he lamented.

SITE Association of Industry (SAI) President Ahmed Azeem Alvialso also raised similar concerns, stating that a single-digit policy rate has been our long-standing demand, but it seems the business community is failing to make the government understand its importance.

Chairman of Pakistan Cloth Merchants Association (PCMA) Chairman and Director of Pakistan Stock Exchange (PSX) Ahmed Chinoy, Pakistan Chemicals and Dyes Merchants Association (PCDMA) Chairman Salim Valimuhammad and Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Atif Ikram Sheikh also said they had anticipated a more aggressive cut to around 9%, which would have significantly lowered borrowing costs, spurred private sector credit growth, and provided stronger support to our manufacturing and export sectors.

Tax Laws (Amendment) Ordinance, 2025

Meanwhile, Bilwani expressed grave concerns over the recently-promulgated “Tax Laws (Amendment) Ordinance, 2025,” and raised serious concerns regarding it.

He said this ordinance, issued without due consultation with stakeholders and in the absence of parliamentary debate, poses severe implications for the business community and rule of law.

He demanded immediate withdrawal of the Ordinance, 2025.

He strongly objected to the introduction of Sections 138(3A) and 140(6A) of the Income Tax Ordinance, which overrides judgments of superior courts and make disputed tax liabilities immediately recoverable, even when relief has been granted by judicial forums

He rejected the insertion of Section 175C, allowing inland revenue officers to be posted at business premises under vague conditions, breaching privacy and creating an environment of harassment and intimidation.

“We reiterate our commitment to fair taxation and documentation of the economy but reject any legislative measure that bypasses due process and threatens legitimate businesses under the pretext of enforcement,” Bilwani said.

He urged the President and the Ministry of Law and Justice to uphold constitutional principles and engage in dialogue rather than promulgating authoritarian ordinances that risk damaging Pakistan’s already fragile business climate.