Pakistan’s industry requires a comprehensive stimulus package as the government measures which, of course, helped the industry to some extent will fall short of the needs for the current situation, says Kamal Mian, the Director of Fast Cables in an interview with ER.
The measures taken by the federal government in terms of rescheduling of funds and salaries-support helped to delay the immediate impact of the Covid-19 pandemic for the formal sector. This is a positive thing. It is because of this reason businesses are still working. It created a space for the industry to meet both ends.
In the informal sector, the impact is bigger as it is difficult and also we are lacking the capacity for intervention.
Were these measures enough or you think it could be much better?
It could be much better of course. The challenge that the private sector is facing is that the State Bank of Pakistan (SBP) did not touch the cost of rescheduling of nonperforming loans of the banks. Now the businesses which cannot survive after rescheduling will suffer as they did not get any new relief. These businesses would have to pay for rescheduling for a year and also do not have the working capital to continue the business. The banks should have thought about it. It is like the banks are partners in good times only. They must understand that the losses of these businesses are ultimately to affect the banking sector as well as the economy. Thus, these businesses should be extended with support so that they meet the challenge. Also, the cost of rescheduling should be minimized.
Does it mean it was like a half-hearted effort?
Let me add to it, that the pandemic peak may be in August, it means the next three months would be tougher like the previous quarter. Thus, more measures are to be taken and it is a must. It must be kept in mind that if the customers would survive then only the banks will survive and ultimately the national economy. The banks should review their measures keeping in view the gravity of the situation. This is an extraordinary time.
Quite a few things must be done by the government. I think the purchasing power of the people has come down naturally and it will affect industry and business and commerce activity. Therefore, we need to announce a stimulus package. Under this, the government should make their spending more efficient. Our government should focus on this also. In our country, the companies which are working with the government on various projects are getting slow payments. The government should make faster payments instead the government systems have slowed down which is not good.
There is no slowdown in the world in terms of working. We have requested the government already. We have to expedite the work, pass the bills of the companies so that a stimulus be created from the demand side.
Challenges before Fast Cables
The biggest one is how to get payments. It is a must for survival. Cash flow is necessary.
Then we have to see how to move when there is a drop in business. In this situation either you have to cut the costs or get more business but we know the business has decreased. Thus, it was a huge challenge for us how to manage the cost with a drop in recoveries. We used the employees salaries scheme to retain the workforce which is like our family. Unfortunately, the governments projects got slow that should not have happened. It created a backlog. Moreover, ban on transportation affected our deliveries.
Budget 2020-21
There are no basic things in the budget. It is a kind of consensus that the targets are unrealistic as how you can generate revenue in this situation. Innovation has always been our problem in the budget making process. The budget makers see it as an assignment. There must be a debate before the process.
What we need is to target business so that activity is generated. Look at the past three years, we did not achieve anything despite not having pandemic situation.
But one good thing that we see since the last two years that the government has increased the cost of imports and moved on to encouraging the local industry
