KCCI urges govt to learn form past policy failure, reverse anti-business measures in budget 2026-27

KARACHI: Chairman Businessmen Group (BMG) Zubair Motiwala and President Karachi Chamber of Commerce & Industry (KCCI) Rehan Hanif have called upon the federal government to avoid repeating policy mistakes that have damaged economic activity, weakened exports, discouraged investment, and undermined industrial competitiveness, urging policymakers to seriously consider the business community’s recommendations while finalizing the Federal Budget 2026-27.

In a joint statement, KCCI leadership stated that the disappointing outcomes of several fiscal measures introduced over the past two years should serve as a cautionary lesson for policymakers. They emphasized that many of these measures had been strongly opposed by KCCI well before their implementation, with detailed warnings supported by facts and economic analysis. Unfortunately, those concerns were ignored, resulting in consequences that have adversely affected businesses, exports, investment, employment, and government revenues.

Commenting on the shift of exporters from the Final Tax Regime (FTR) to the Normal Tax Regime (NTR) under the Finance Act 2024, Zubair Motiwala stated that KCCI had categorically warned that increasing the tax burden on exporters would prove counterproductive. “The government adopted a short-term revenue approach without considering its long-term impact on exports and economic growth. The results are now evident. Pakistan’s exporter base has shrunk, export competitiveness has suffered, and tax collection from exporters has failed to achieve the desired outcome. At a time when global supply chain disruptions and geopolitical developments presented a unique opportunity for Pakistan to capture additional export markets, the country failed to capitalize on those opportunities.”

He reiterated KCCI’s demand for the immediate restoration of the Final Tax Regime at a 1 percent rate for all exporters, stressing that export growth remains the most sustainable path towards improving foreign exchange reserves and economic stability.

President KCCI Rehan Hanif expressed serious concern over the removal of the Export Facilitation Scheme (EFS) benefits on yarn and fabric. He stated that the scheme had played a critical role in enhancing the competitiveness of Pakistan’s export-oriented industries. “KCCI had never supported misuse of the scheme, but instead of abolishing the facility, we had proposed stricter monitoring and reforms to ensure transparency and fairness. Unfortunately, the decision has negatively impacted exporters’ liquidity while failing to achieve the intended objectives.”

KCCI leadership also strongly criticized the continuation of Super Tax under Section 4C, describing it as a punitive levy that discourages growth, investment and entrepreneurship.

“Taxing success is neither a sustainable nor growth-oriented policy. Businesses that expand, invest and create employment should be encouraged rather than penalized. While such taxes may generate short-term revenues, they significantly damage investor confidence, discourage foreign direct investment and force businesses to postpone or abandon expansion plans”, said Zubair Motiwala.

Highlighting the severe challenges facing industry due to energy costs, Rehan Hanif noted that KCCI has consistently advocated for regionally competitive utility pricing. He said that the withdrawal of Regionally Competitive Energy Tariff (RCET) had severely undermined Pakistan’s export competitiveness, making industrial electricity among the most expensive in the region.

“Countries such as India, Bangladesh and Vietnam continue to attract export orders due to their competitive energy pricing structures while Pakistani exporters struggle with unsustainable production costs. The restoration of RCET is essential to revive industrial growth, generate employment, increase exports and strengthen the national economy,” he remarked.

Referring to gas pricing and supply policies, Zubair Motiwala observed that successive governments have failed to address structural flaws within the energy sector while burdening productive industries with the costs of inefficiencies, leakages, theft and cross-subsidies.

“Industrial consumers, who maintain one of the highest bill recovery rates in the country, are unfairly carrying the financial burden of systemic inefficiencies. Despite repeated tariff increases and policy interventions, circular debt continues to rise. This demonstrates that existing policies are failing to address the root causes of the problem,” he said.

To resolve these longstanding issues, Chairman BMG proposed the segregation of SSGC operations into separate entities for industrial and non-industrial consumers, enabling transparent accounting, improved efficiency and better identification of sources contributing to circular debt.

Motiwala also raised concerns regarding a number of regulatory and taxation measures that continue to create unnecessary hardships for businesses. These include annual biometric verification requirements under SRO 350, unresolved technical flaws in the digital invoicing system, E-Bilty procedures, advance tax regimes, income tax notices, Annexures H and J, taxation disparities affecting industrial importers, customs penalties, and various exemptions relating to FATA/PATA and Gilgit-Baltistan.

Regarding digital invoicing, Rehan Hanif stated that despite significant investments by businesses, technical glitches, duplicate entries, integration issues and delayed rectification processes continue to create operational challenges.

“KCCI believes that the digital invoicing framework requires further refinement and testing before full-scale implementation. We strongly recommend extending the integration deadline until December 2026 to allow businesses and authorities sufficient time to address existing shortcomings,” he added.

KCCI leadership, however, appreciated Prime Minister Shehbaz Sharif for his positive engagement with the business community during his recent meeting with KCCI on June 1, 2026. They welcomed several important commitments made by the Prime Minister, including the establishment of a PRAL office in Karachi, expeditious processing of pending sales tax refunds, regular presence of senior FBR officials in Karachi, and amendments to the Electric Vehicle Policy aimed at promoting local manufacturing and reducing dependence on imports.

“These measures reflect a positive response to genuine concerns raised by the business community and demonstrate the Prime Minister’s willingness to engage constructively with stakeholders”, said Motiwala.

In their concluding remarks, Chairman BMG Zubair Motiwala and President KCCI Rehan Hanif urged the government to carefully review the recommendations submitted by KCCI and other trade bodies before finalizing the Federal Budget 2026-27.

“The business community is not merely highlighting problems; it is offering practical, evidence-based solutions to strengthen Pakistan’s economy. Policymakers must recognize that economic growth, export expansion, industrialization and revenue generation are interlinked objectives that can only be achieved through consultation and partnership with the private sector. The government must reverse policies that have demonstrably failed and adopt measures that promote investment, competitiveness, exports and sustainable economic growth. Pakistan’s economic future depends on a strong partnership between the government and the business community because Pakistan and its entrepreneurs cannot succeed in isolation”, they concluded.