Islamabad: Special Investment Facilitation Council (SIFC) National Coordinator Lt Gen Sarfraz Ahmad on Thursday outlined a reform-focused roadmap aimed at making Pakistan’s economy more competitive, stressing the need for a pragmatic exchange rate, lower interest rates, and a major overhaul of the corporate tax structure.
Addressing leading businesspersons during the second day of the Dialogue on Economy organised by the Pakistan Business Council (PBC), Ahmad said Pakistan’s stabilisation efforts had helped prevent further deterioration, but the economy still lacked a clear and actionable growth plan.
He said the current fiscal framework was overly dependent on taxation and disproportionately burdened the formal corporate sector. Pakistan’s effective corporate income tax rate, after accounting for all applicable taxes, exceeds 50%, which he termed unsustainable.
Ahmad said the government was considering reducing the corporate income tax from 29% to 25%, abolishing the 10% super tax, eliminating the 15% inter-corporate dividend tax, and lowering the maximum individual tax rate from 45% to 25%. He added that the ad hoc nature of certain taxes had discouraged corporate expansion and encouraged businesses to split into smaller units to manage their tax exposure.
“There is an absolute consensus in the government that this excessive taxation format cannot take Pakistan forward,” he said. “Authorities must correct it if we want sustainable growth.”
The SIFC coordinator also urged a reduction in the policy rate, which he argued should not remain at 11% when inflation is falling. Monetary policy, he said, must align with economic realities to ease borrowing pressures on businesses.
On the exchange rate, Ahmad noted that artificial stabilisation measures had previously created distortions. He called for a market-driven, competitive exchange rate framework that recognises Pakistan’s structural vulnerabilities without suppressing real market signals.
Discussing growth priorities, he said the country’s long-standing consumption-led and debt-driven model was no longer viable. Pakistan must shift decisively toward an export-led growth strategy rather than relying on protectionist policies or subsidies. He urged businesses to seek global competitiveness instead of depending on fiscal incentives.
Ahmad also pointed to low levels of foreign direct investment (FDI), noting that annual net inflows currently hover around USD 1.2 billion. He said FDI needed to at least double to USD 2.5 billion, but emphasised that foreign investment would rise only when local businesses increased their own investment.
He highlighted that much of the past decade’s investment had flowed into the power sector, with significant dividend outflows, underscoring the need to prioritise export-oriented FDI and discourage consumption-led investment. Ahmad added that Pakistani investors were increasingly moving capital abroad, with profits earned domestically being reinvested in countries like Egypt and Saudi Arabia.
He said the SIFC’s role, refined after the 2024 elections, now centres on identifying foreign investment opportunities, addressing policy bottlenecks, and facilitating businesses under a streamlined framework.
Ahmad concluded that Pakistan’s stabilisation efforts must now give way to a coherent, long-term growth strategy built around competitiveness, investment, and exports, rather than short-term fiscal fixes.
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