Chairman Businessmen Group (BMG) Muhammad Zubair Motiwala has stressed the urgent need for immediate fiscal, energy and export-related policy interventions in light of escalating US-Iran tensions, warning that the worsening regional situation could severely destabilise Pakistan’s economy if timely and well-calibrated measures are not taken.

In a letter addressed to Federal Minister for Finance & Revenue Muhammad Aurangzeb, Zubair Motiwala emphasised that the business community was becoming increasingly concerned over the adverse implications of regional instability on Pakistan’s trade, industry and overall economy.

He pointed out that escalating US-Iran tensions were disrupting global trade flows, increasing freight and insurance costs and causing significant volatility in international energy markets.

He noted that Pakistan’s economy was already under considerable pressure due to stagnant exports, weakening industrial activity and declining remittance inflows, all of which were aggravating external account vulnerabilities.

Zubair Motiwala strongly recommended the immediate restoration of zero-rating of sales tax at the input stage for export-oriented sectors, including textiles, leather, surgical instruments, carpets and sports goods. He pointed out that these sectors contribute nearly 80 to 85 percent of Pakistan’s total exports and therefore their liquidity position is extremely important for sustaining export momentum.

He observed that the shift from zero-rating to a refund-based regime had created serious working capital constraints for exporters due to delayed refund cycles and increased financial costs. According to him, the restoration of zero-rating would ensure uninterrupted liquidity, lower the cost of capital and significantly improve the global competitiveness of Pakistani exports.

Highlighting another major issue, Zubair Motiwala proposed that customs duties and taxes should be assessed on the Ex-Works (EXW) value rather than the existing Cost and Freight (CNF) basis. He explained that the current CNF-based valuation mechanism inflates the dutiable value of imported goods because it includes freight and insurance costs, both of which have sharply increased due to geopolitical disruptions.

He stated that EXW valuation would more accurately reflect the actual price of goods at origin and provide a fairer, more transparent, and more rational taxation structure. He added that such a change would reduce input costs for industries and improve manufacturing efficiency and competitiveness.

Expressing grave concern over the high cost of electricity for industries, Zubair Motiwala stated that Pakistan’s industrial electricity tariffs remained uncompetitive, averaging around 14 to 16 US cents per kilowatt-hour, thereby substantially increasing production costs.

He pointed out that although the Federal Government had introduced an Incremental Consumption Package (ICP), under which concessional tariffs and relief of approximately Rs. 10.3 per unit were being provided to industries across Pakistan on incremental consumption, Karachi’s industrial sector had not received its due share under the package.

Zubair Motiwala revealed that the Federal Government had already released approximately Rs7 billion under the Karachi package, but this amount had not been passed on to industrial consumers. He further stated that the total pending relief for Karachi industries was estimated at approximately Rs28 billion to Rs33 billion.

According to Zubair Motiwala, this situation had created a serious structural disadvantage for Karachi-based industries because industries in other regions were benefiting from concessional tariffs while industries in Karachi continued to bear higher effective electricity costs.

He strongly demanded the immediate disbursement of the pending Rs28 billion to Rs33 billion, stating that this would provide much-needed liquidity relief to exporters who were already facing severe cash flow constraints. He also called for establishing a transparent mechanism to ensure the direct transfer of benefits to industrial consumers.

Turning to the issue of gas tariffs and supply, Zubair Motiwala said that industrial gas tariffs had increased substantially while supply inconsistencies continued to disrupt business operations. He stressed that gas was a critical input for export-oriented industries and its pricing directly affected Pakistan’s competitiveness in international markets.

He warned that in the prevailing environment shaped by escalating US-Iran tensions, businesses were already facing rising oil prices, increased shipping costs, logistics disruptions, war risk surcharges and heightened uncertainty in global markets. These factors, he said, were likely to adversely impact industrial performance and export volumes while significantly increasing the cost of doing business.

Clarifying the business community’s position, Zubair Motiwala said that industries were not asking for subsidized gas. Rather, they were demanding that gas should be supplied strictly on a cost-of-service basis, with tariffs reflecting the actual cost of procurement and supply.

He further stressed that gas pricing should not be used as a revenue-generation tool during such difficult times. In this regard, he proposed that gas tariffs should be rationalised to actual cost levels, a transparent and predictable pricing mechanism should be adopted, and priority gas supply should be ensured for export-oriented industries.

Referring to the growing burden of logistics costs, he said that rising global shipping costs and insurance premiums, exacerbated by regional tensions, had significantly increased exporters’ expenses. He stressed the need to immediately restore freight subsidy and export facilitation schemes to offset these external cost pressures.

He stated that the reintroduction of freight subsidy schemes would help exporters maintain access to international markets, preserve pricing competitiveness and meet their contractual commitments.

Zubair Motiwala also drew attention to the substantial amount of exporters’ funds that remained stuck in pending tax refunds, creating severe liquidity constraints and increasing reliance on expensive borrowing.