Karachi
\nThe Businessmen Panel (BMP) of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has issued a stark warning over the government\u2019s aggressive fuel taxation policy, stating that the unprecedented surge in petroleum prices is pushing the national economy toward stagnation while severely undermining industrial competitiveness.
\nBMP Chairman and former FPCCI President, Mian Anjum Nisar, said that Pakistan\u2019s recent fuel price hikes\u2014ranging between 63% to over 75% in petrol and diesel\u2014stand in sharp contrast to regional economies, where increases have remained limited to just 2% to 10%. He noted that India, Bangladesh, China, and Vietnam have adopted calibrated pricing strategies, shielding their industries through subsidies, tax adjustments, and gradual revisions, while Pakistan has imposed a disproportionately heavy burden on its economy.
\n\u201cThis policy divergence is not just alarming\u2014it is economically damaging,\u201d he said. \u201cAt a time when our exporters are already struggling with high energy costs and declining global demand, such an excessive increase in fuel prices is effectively pricing Pakistan out of international markets.\u201d
\nMian Anjum Nisar emphasized that petrol prices reaching around Rs458 per litre\u2014driven largely by a petroleum levy exceeding Rs160 per litre\u2014reflect a fiscal approach overly reliant on indirect taxation. While acknowledging the constraints posed by the IMF programme, he warned that excessive dependence on fuel taxes could choke economic activity rather than stabilize finances.
\n\u201cFuel is the backbone of all economic sectors\u2014transport, manufacturing, agriculture, and services. When its cost rises sharply, the entire economic chain is disrupted,\u201d he explained. \u201cThis is not just a price increase; it is a structural shock.\u201d
\nHe pointed out that logistics and transportation costs in Pakistan are already among the highest in the region. The latest fuel hikes will further inflate freight charges, increase input costs for manufacturers, and reduce profit margins across industries. Export-oriented sectors, particularly textiles and value-added segments, are likely to face significant setbacks as global buyers shift to more cost-competitive markets.
\n\u201cOur regional competitors are gaining ground precisely because their governments are protecting industry from such shocks,\u201d he said. \u201cBangladesh and Vietnam, for example, continue to offer stable energy pricing, enabling their exporters to secure long-term contracts at competitive rates.\u201d
\nThe BMP chief also expressed concern over the impact on small and medium enterprises (SMEs), which form the backbone of Pakistan\u2019s industrial base. \u201cUnlike large corporations, SMEs do not have the financial cushion to absorb sudden cost increases. Many will be forced to scale down operations, reduce workforce, or shut down entirely,\u201d he warned.
\nIn agriculture, the implications are equally serious. Diesel-powered machinery, including tractors, tube wells, and harvesters, will become significantly more expensive to operate. This, he noted, will drive up the cost of food production, contributing to inflationary pressures and exacerbating food security concerns.
\nMian Anjum Nisar further highlighted the paradox of over-taxation, cautioning that higher fuel taxes may not yield the expected revenue gains. \u201cThere is a threshold beyond which increased taxation leads to reduced consumption and, ultimately, lower revenue collection. As economic activity slows, fuel demand declines, undermining the very fiscal objectives the government seeks to achieve,\u201d he said.
\nHe also criticized the distortionary impact of current pricing policies, particularly the cross-subsidization between petrol and diesel. \u201cSuch measures disrupt market signals and create inefficiencies. Instead of promoting rational consumption, they redistribute financial stress within an already fragile system,\u201d he added.
\nOn the social front, the BMP chairman warned of widespread repercussions. Fuel price increases, he said, are inherently regressive, disproportionately affecting lower and middle-income groups. The ripple effects\u2014higher transport fares, increased food prices, and rising utility costs\u2014will erode purchasing power and heighten economic hardship.
\n\u201cThis is not just an economic issue; it is a social challenge,\u201d he said. \u201cPersistent inflation and declining real incomes can lead to public discontent and instability.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
Karachi The Businessmen Panel (BMP) of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has issued a stark warning over the government\u2019s aggressive fuel taxation policy, stating that the unprecedented surge in petroleum prices is pushing the national economy toward stagnation while severely undermining industrial competitiveness. BMP Chairman and former FPCCI President, Mian […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[5],"tags":[],"class_list":{"0":"post-540258","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"\n