KARACHI: The President of the Karachi Chamber of Commerce and Industry (KCCI), Muhammad Jawed Bilwani, has called on the State Bank of Pakistan (SBP) to significantly lower the key policy rate to around 6 percent to align with regional economies and alleviate the rising costs faced by businesses in Pakistan.

In a statement on Friday, Bilwani highlighted that Pakistan's interest rates are considerably higher than those of neighboring countries, creating challenges for the business sector and hindering industrial development. He pointed out that interest rates in countries like Vietnam, Cambodia, and India are notably lower, resulting in a competitive disadvantage for Pakistan.

Bilwani emphasized the urgent need for the SBP to reduce the interest rate to 5-6 percent to provide relief to businesses, particularly small and medium-sized enterprises (SMEs), which are heavily burdened by high financing costs.

He also recommended structural reforms to address the imbalance in credit distribution, noting that government borrowing consumes a significant portion of available credit, limiting access for the private sector. Bilwani argued that a business-friendly interest rate policy would stimulate private sector investment and employment, contributing to economic revival.

Criticizing the SBP's recent decision to maintain current rates, Bilwani expressed disappointment over the unfulfilled government promises of reducing interest rates. He noted that despite assurances of single-digit rates by the end of 2024, the rates remain high.

Bilwani asserted that addressing interest rates alone is insufficient. He identified other factors contributing to Pakistan's lack of competitiveness, such as high electricity tariffs, taxes, and port charges, which collectively increase the cost of doing business in the country.

He stressed the need for a comprehensive strategy to align Pakistan's industrial input costs with regional standards, emphasizing the importance of creating an attractive environment for exports and investment.

Bilwani also urged the government to reduce electricity tariffs to promote industrial consumption and facilitate the establishment of new industries, which he believes is crucial for attracting investors.

In conclusion, the KCCI President called on the central bank to collaborate with the business community in developing policies that support industrial growth, enhance exports, and strengthen the national economy.