Businessmen Group (BMG) Chairman Muhammad Zubair Motiwala on Monday called for immediate fiscal, energy and export-related policy interventions amidst the ongoing Iran war, warning the worsening regional situation can severely destabilize Pakistan’s economy without timely and well-calibrated measures.
In an open letter addressed to Finance Minister Muhammad Aurangzeb, Motiwala emphasized the business community was becoming increasingly concerned over the adverse implications of regional instability on Pakistan’s trade, industry and overall economy. He noted escalating U.S.-Iran tensions were disrupting global trade flows, increasing freight and insurance costs, and causing significant volatility in international energy markets.
He further noted that Pakistan’s economy was already under considerable pressure due to stagnant exports, weakening industrial activity and declining remittance inflows, all of which were aggravating external account vulnerabilities.
The BMG chairman has strongly recommended the immediate restoration of zero-rating of sales tax at the input stage for export-oriented sectors, including textiles, leather, surgical instruments, carpets and sports goods. He said these sectors contributed nearly 80-85% of Pakistan’s total exports and their liquidity position was extremely important for sustaining export momentum.
He claimed shifting from zero-rating to a refund-based regime had created serious working capital constraints for exporters due to delayed refund cycles and increased financial costs. Restoring the zero-rating, he claimed, would ensure uninterrupted liquidity, lower the cost of capital and significantly improve the global competitiveness of Pakistani exports.
Motiwala also proposed assessing customs duties and taxes on Ex-Works (EXW) value instead of the existing Cost and Freight (CNF) basis. He explained the current CNF-based valuation mechanism inflates the dutiable value of imported goods because it includes freight and insurance costs, both of which have sharply increased due to geopolitical disruptions. He asserted the EXW valuation would more accurately reflect the actual price of goods at origin and would provide a fairer, more transparent and rational taxation structure. He added that such a change would reduce input costs for industries and improve manufacturing efficiency and competitiveness.
Expressing grave concern over the high cost of electricity for industries, the chairman said Pakistan’s industrial electricity tariffs remained uncompetitive, averaging around 14 to 16 U.S. cents per kilowatt hour, which was substantially increasing the cost of production. He noted the government had introduced an Incremental Consumption Package, under which concessional tariffs and relief of approximately Rs. 10.3/unit were being provided to industries nationwide on incremental consumption. However, he claimed, Karachi’s industrial sector had not received its due share under the package.
According to Motiwala, the federal government had already released approximately Rs. 7 billion under the package for Karachi, but this amount had not been passed on to industrial consumers. He further claimed the total pending relief for Karachi’s industries was estimated at Rs. 28-33 billion.
The BMG chairman said the prevailing situation had created a serious structural disadvantage for Karachi-based industries because industries in other regions were benefiting from concessional tariffs while industries in the Sindh capital continued to bear higher effective electricity costs. He demanded the immediate disbursement of the pending funds, stating this would provide much-needed liquidity relief to exporters who were already facing severe cash flow constraints. He also called for the establishment of a transparent mechanism to ensure the direct transfer of benefits to industrial consumers.
Motiwala also said industrial gas tariffs had increased substantially while supply inconsistencies continued to disrupt business operations. He stressed that gas was a critical input for export-oriented industries and its pricing directly affected Pakistan’s competitiveness in international markets. He warned that in the prevailing environment shaped by escalating U.S.-Iran tensions, businesses were already facing rising oil prices, increased shipping costs, logistics disruptions, war risk surcharges and heightened uncertainty in global markets. These factors, he said, were likely to adversely impact industrial performance and export volumes while significantly increasing the cost of doing business.
Clarifying the business community’s position, the BMG chairman said industries were not asking for subsidized gas. Rather, they were demanding the supply of gas strictly on a cost-of-service basis, with tariffs reflecting the actual cost of procurement and supply. He further stressed that gas pricing should not be used as a revenue-generation tool during such difficult times. In this regard, he proposed rationalizing gas tariffs to actual cost levels through a transparent and predictable pricing mechanism, as well as provision of gas on priority to export-oriented industries.
Referring to the growing burden of logistics costs, he said that rising global shipping costs and insurance premiums, exacerbated by regional tensions, had significantly increased exporters’ expenses. He called for restoring freight subsidy and export facilitation schemes to offset these external cost pressures. He said the reintroduction of freight subsidy schemes would help exporters maintain access to international markets, preserve pricing competitiveness and meet their contractual commitments.
Motiwala also drew attention to the substantial amount of exporters’ funds that remained stuck in pending tax refunds, creating severe liquidity constraints and increasing reliance on expensive borrowing. He strongly urged the government to release all pending refunds on a priority basis and ensure a time-bound automated mechanism for future processing so that exporters do not continue to face unnecessary financial stress.