Pakistan's new federal budget and ongoing tariff reforms are designed to attract foreign investment and enhance the country's competitiveness as a business destination, Commerce Minister Jam Kamal Khan stated on Friday. He also cautioned that tensions surrounding the Strait of Hormuz continue to impact regional trade and investor confidence.
Budget Highlights and Economic Goals
Pakistan unveiled a federal budget of Rs18.77 trillion ($67.49 billion) on Friday, targeting a 4 percent economic growth rate for the next fiscal year starting July 1. This move aims to transition from economic stabilization under a $7 billion International Monetary Fund (IMF) program toward faster, investment-led expansion. The budget includes tax relief measures for businesses and follows a broader government initiative to gradually reduce customs and regulatory duties.
“What we have tried to present in the current budget is a very friendly environment for investors,” Khan told Arab News after Finance Minister Muhammad Aurangzeb presented the fiscal plan.
Multi-Year Tariff Reform Program
The minister emphasized that the government's economic strategy extends beyond the budget, incorporating a multi-year tariff reform program designed to lower the cost of doing business, improve competitiveness, and encourage both domestic and foreign investment.
“For the last one year, the government of Pakistan has initiated a tariff policy where there is a constant reduction in all the custom duties, in the regulatory duties,” he said.
Khan explained that lower tariffs would facilitate Pakistani businesses, particularly small and medium-sized enterprises, in importing quality raw materials and intermediate goods. Additionally, it would make Pakistan a more attractive market for international companies.
“So this constant depreciation of the tariff lines in the next three years is an indication that Pakistan is going to be a very open market where we are giving competitiveness, chance for people to come in, work in Pakistan, companies to come and do business in Pakistan.”
Addressing Business Community Concerns
The minister noted that the government had addressed long-standing complaints from the business community regarding Pakistan's tax structure through changes announced in the latest budget.
“That has been addressed in this budget for us, for the whole business community,” he said.
The budget includes reductions in the super tax for larger businesses, lower taxes on property transfers, and cuts in some withholding taxes. These measures are intended to encourage investment while maintaining fiscal discipline under the IMF program.
Regional Instability and Strait of Hormuz Tensions
Khan stated that the reforms are being implemented amid regional instability, which remains a major obstacle to investment. He highlighted tensions involving the United States and Iran and their impact on trade through the Strait of Hormuz, one of the world's most critical shipping and energy supply routes.
“We are expecting a lot of investment from many other countries in the region,” he said. “But as you know, the region is quite turmoil at this moment.”
The minister expressed hope that countries across the region are seeking a resolution to the crisis, as the restoration of normal trade flows through Hormuz would boost investor confidence and unlock new economic opportunities.
“We are all hopeful that when the Strait of Hormuz is going to open up, that is the biggest thing which every country is now working on,” Khan said.
Pakistan's Diplomatic Role
Khan emphasized that Pakistan continues to play a diplomatic role aimed at easing tensions and helping restore stability in the region.
“Pakistan has played its role, still is playing its role,” he said.
Pakistan has emerged as a key venue in recent diplomatic efforts between the US and Iran, hosting direct talks and facilitating communication between the two sides as negotiations aimed at ending months of conflict continue.
