LAHORE: The Lahore Chamber of Commerce and Industry has expressed optimism the federal government would incorporate its recommendations into the upcoming budget to stimulate economic growth and industrial development.
LCCI President Mian Abuzar Shad, Senior Vice President Engineer Khalid Usman and Vice President Shahid Nazir Chaudhry said that the recommendations for Federal Budget 2025-26 have already been forwarded to the government and concerned departments. They hoped that these recommendations would be given due consideration to address the country’s pressing economic challenges.
The LCCI’s budget proposals come at a time when Pakistan’s economy shows signs of gradual recovery, with GDP growth improving from 0.21% in 2022-23 to 2.38% in 2023-24. The current account deficit has also narrowed significantly, dropping from $3.27 billion to $1.69 billion with a surplus of $1.2 billion recorded in the first half of the current fiscal year.
“Despite these positive indicators, the economy remains vulnerable due to stagnant industrial growth, soaring public debt exceeding Rs 70 trillion and a persistent trade deficit of $24 billion in 2023-24. The industrial sector, a critical driver of economic activity, expanded by a mere 1.21%, while large-scale manufacturing saw negligible growth of 0.07%, underscoring the need for urgent policy interventions”, the LCCI office-bearers added.
To address these challenges, the LCCI has proposed a series of strategic measures. On the tariff front, the LCCI advocates for a cascading duty structure, with raw materials taxed at 0%, intermediate goods at 5-8% and finished products at 18% to encourage local value addition. It also calls for duty-free imports of wastewater treatment plants to help industries meet environmental standards and maintain export competitiveness. Additionally, the LCCI stresses the importance of protecting the local pharmaceutical industry by maintaining tariff shields on 22 essential active pharmaceutical ingredients (APIs) to reduce import dependency and ensure health security.
In terms of policy reforms, the LCCI has stressed the need for reducing the policy interest rate to 6% to lower borrowing costs and stimulate private-sector investment. The LCCI has also recommended regionally competitive energy tariffs to align Pakistan’s industrial costs with those of neighboring countries like India and Bangladesh.
Other key proposals included reinstating the Final Tax Regime for exporters to simplify compliance, introducing a fixed tax regime for traders to broaden the tax base and capping individual and association taxes at 29% to prevent brain drain and encourage documentation. The LCCI has also highlighted the importance of promoting electric vehicle adoption, starting with public transport and two-wheelers alongside incentives for local EV manufacturing.
Procedural improvements form another critical component of the LCCI’s recommendations. The LCCI has called for the full digitization of the Federal Board of Revenue to minimise human intervention and curb corruption. It has also urged the government to expedite tax refunds, particularly for exporters, by ensuring that the FASTER system processes refunds within 72 hours, with compensation for delays. The LCCI has further proposed abolishing the Sindh Infrastructure Development Cess for exporters, automating sales tax filings and extending audit cycles to five years to reduce harassment of compliant businesses.
Sector-specific recommendations included measures to support the IT and freelancing industry, such as allowing foreign exchange accounts and offering rebates to IT exporters to counter capital flight. In agriculture, the LCCI has advocated for a progressive income tax on large landholdings while exempting small farmers. The real estate sector has been advised to align property valuations with market rates to document hidden wealth, while the textile industry has been recommended for the reinstatement of the Drawback of Local Taxes and Levies scheme and an increase in duty drawbacks to 3%.
LCCI President Mian Abuzar Shad has also stressed the need for broader macroeconomic reforms, including the privatisation of loss-making state-owned enterprises (SOEs) to reduce fiscal burdens, curbing non-essential government expenditures and cracking down on smuggling networks that cost the economy billions annually.
Engineer Khalid Usman that the proposals are designed to foster growth through equity, efficiency and ease of doing business, calling for decisive government action to address debt, expand the tax net and boost exports. Vice President Shahid Nazir Chaudhry said that Pakistan’s economic survival hinges on industrialisation and stable, long-term policies rather than ad hoc measures.
Copyright Business Recorder, 2025
