RCCI Urges SBP to Reduce Policy Rate to Single Digit to Boost Business Competitiveness

RAWALPINDI, JUL 28 /DNA/ – Usman Shaukat, President of the Rawalpindi Chamber of Commerce and Industry (RCCI), has called on the State Bank of Pakistan (SBP) to slash the policy rate to single digits in the upcoming Monetary Policy Committee (MPC) meeting. He emphasized that aligning Pakistan’s interest rates with those of regional economies is crucial to easing the mounting cost of doing business in the country.

Highlighting the disparity, Mr. Shaukat noted that borrowing costs in Pakistan are among the highest in the region, stifling business growth and discouraging investment. “Interest rates in Vietnam stand at 6.3 percent, followed by Cambodia at 3 percent, Indonesia at 6 percent, and India at 5.5 percent,” he stated.

He further pointed out that Pakistan’s competitiveness is severely undermined by steep energy costs. “Electricity tariffs in Pakistan hover around 16 cents per unit compared to 9 cents in Bangladesh, 8 cents in Vietnam, 10 cents in Cambodia and Indonesia, 7.2 cents in India, and just 5 cents in Sri Lanka,” he added.

Mr. Shaukat stressed that a reduction of at least 3 percent in the interest rate would provide vital relief to businesses, particularly small and medium-sized enterprises (SMEs), which are disproportionately burdened by high financing costs.

The RCCI President warned that Pakistan’s uncompetitive business environment is not only a result of high interest rates but also elevated electricity, gas, and water tariffs, steep taxation, and one of the highest minimum wages in the region, all coupled with low labour productivity. “These elements must be rationalised to lower the cost of doing business,” he urged.

“Industries are operating below capacity, new investments are stalled, and business confidence is at a low,” said Mr. Shaukat. “Persisting with outdated monetary policies will only worsen unemployment, depress investment, and cause revenue shortfalls.”The RCCI reiterated its call for urgent monetary and structural reforms to revive industrial activity, attract investment, and enhance Pakistan’s regional competitiveness.