Business bodies say budget lacks required incentives to revive struggling industries
LAHORE: Major business bodies have expressed significant reservations about the Federal Budget 2025-26, warning it lacks the strategic vision and incentives needed to revive Pakistan's struggling industries and attract vital investment.
The Businessmen Panel (BMP) declared the budget risks pushing the economy further off the recovery path, citing a critical absence of measures to stimulate industrial activity, reduce crippling energy costs, or ease the cost of doing business.
While the Pakistan Industrial and Traders Associations Front (PIAF) acknowledged some positive steps like tax simplification, it cautioned that overly optimistic revenue targets and the failure to address core issues like high electricity tariffs and interest rates overshadow these gains and hinder sustainable growth.
The BMP of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has voiced serious reservations over the Federal Budget 2025-26, criticizing it for lacking any meaningful incentives to stimulate trade, investment, and industrial revival.
BMP Chairman Mian Anjum Nisar has urged the government to immediately rectify policy anomalies, cautioning that the budget, if left uncorrected, could push Pakistan further away from the path of economic recovery.
The BMP chairman maintained that 'while the budget may satisfy certain technical benchmarks, it does not reflect the pressing needs of the productive sectors of the economy.' He observed that the private sector had hoped for a more balanced and growth-oriented fiscal plan—one that would offer clear direction for industrial revitalization and export development—but instead received a document heavily focused on revenue collection and administrative compliance.
According to Anjum Nisar, the government has missed a crucial opportunity to send positive signals to investors and entrepreneurs. Despite challenging global conditions and domestic constraints, the budget does not contain a strategy to stimulate industrial activity, improve business competitiveness, or reduce the excessive cost burden on manufacturers and exporters. 'This is not the kind of budget that can revive economic momentum,' he said.
He warned that enforcing compliance without parallel incentives will dampen entrepreneurial energy. The increase in utility tariffs, particularly for gas—an essential input for various industries—without any relief measures, will directly affect export-oriented sectors and small businesses already battling high operational costs. He questioned the rationale behind burdening industries with unaffordable energy while speaking of industrial growth.
Anjum Nisar said the absence of targeted steps to boost local production capacity and attract investment shows a lack of clarity in the government's economic vision.
He stressed that the government needs to look beyond revenue targets and short-term fiscal adjustments. 'What the economy demands today are bold and focused steps to ease doing business, reduce energy costs, improve infrastructure, and enhance export potential.'
Highlighting the significance of industrial performance in determining national stability, the BMP leader stated that the government should have come up with a practical roadmap to strengthen domestic industries, support SMEs, and introduce tax simplifications to widen the base instead of squeezing the existing compliant segments. Unfortunately, the budget continues to rely on conventional tools without offering real innovation or long-term direction.
He was also disappointed by the limited allocation for public infrastructure development, pointing out that the proposed development expenditures fall short of what is required to uplift logistics, water supply, power transmission, and road connectivity—critical elements that facilitate business and trade. He emphasized that any meaningful strategy for growth must go hand in hand with investment in infrastructure, especially in urban industrial hubs.
The BMP chairman further criticized the absence of reforms to address credit access and financing issues faced by industries. High interest rates continue to choke expansion plans and discourage entrepreneurship. Without a clear pathway to affordable financing, real sector growth will remain constrained, he noted.
He questioned the logic behind setting overly ambitious targets for revenue and growth in the absence of a concrete enabling framework. 'The ground reality doesn't match the projections presented in the budget. Unless core challenges are addressed, the macroeconomic indicators cannot show lasting improvement,' he stated.
Anjum Nisar noted that 'Pakistan cannot continue to rely solely on remittances or external borrowing for economic survival. It must build an export-led model backed by value-added manufacturing, technology enhancement, and trade diversification. The budget, however, fails to initiate such transformation, lacking strategic sectoral planning or industrial deepening.'
He emphasized that the economy is at a stage where growth must take precedence over compliance. The private sector requires reassurance through facilitation, not surveillance. Instead, the tone of the budget sends a message of rigidity and pressure rather than cooperation and partnership with the business community.
Copyright Business Recorder, 2025
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