Exporters express dismay over government measures

ISLAMABAD: Business representatives have voiced reservations over the federal budget for 2026-27, saying it does not provide the scale of support needed to lift industrial output, strengthen exports, revive agriculture and create jobs.

The Pakistan Business Forum (PBF) said the budget lacked the bold measures required to speed up industrial growth and improve Pakistan’s export performance. PBF President Khawaja Mehboobur Rehman said the government’s target of raising petroleum levy collection by 18% had increased concerns that inflationary pressure would persist rather than ease for consumers and businesses. He said higher taxation linked to petroleum was likely to keep transport and production costs high across the economy.

The forum also said the budget did not contain meaningful incentives to expand exports and improve Pakistan’s competitiveness in international markets, describing that omission as a missed opportunity at a time when export-led growth was critical for economic stability. It further pointed to the absence of any clear relief on industrial energy tariffs, saying industries operating at nearly half their capacity could not recover without major cuts in energy costs.

In its reaction, the PBF said the relief announced for industry was not broad enough to restore competitiveness or attract investment. It stated that businesses had been expecting a wider package of measures. The forum, however, welcomed the decision to cut super tax by 2% and to eliminate it entirely for businesses with annual turnover of up to Rs500 million, calling it a positive step for a large section of the business community, including the real estate and construction sectors.

The PBF also raised concern over the continued growth of the undocumented economy. It said the size of the cash economy had reportedly risen from Rs9 trillion to Rs12 trillion within a year, and described that as evidence of policy weaknesses and inadequate progress in documenting economic activity.

Exporters seek simpler tax framework

Separately, Ismail Suttar, founder chairman of the Salt Manufacturers Association of Pakistan, said the budget had failed to introduce measures capable of delivering substantial export growth at a time when the country urgently needed foreign exchange earnings. He said the budget did not lay out a clear plan for broadening Pakistan’s export base or resolving the problems faced by manufacturers.

Suttar said exporters had received little more than limited tax adjustments despite repeated assurances of support for productive sectors. He said one of the biggest disappointments was the government’s decision not to restore the final tax regime for exporters, adding that the export sector had been seeking a simple tax structure that would lower compliance costs and reduce interaction with tax authorities.

Referring to the changes announced, Suttar said the reduction in withholding tax was not enough while exporters remained under the normal tax regime. He said businesses required a predictable and straightforward system rather than greater paperwork and procedural hurdles.

According to Suttar, Pakistan’s regional competitors were moving aggressively to support exporters through tax incentives, lower production costs and easier regulations, while the latest budget offered no comparable relief.