Pakistan textile industry urge PM to release funds

The textile industry has urged Prime Minister Nawaz Sharif and Finance Minister Ishaq Dar to release funds for disbursement of duty drawback to exporters against realisation of export proceeds, besides paying refunds of sales tax to the exporters against the already issued RPOs to save the industry from the liquidity crisis.

In a joint press conference at Aptma House – along with other textile associations including Pakistan Hosiery Manufacturers Association, Pakistan Readymade Garments Manufacturers and Exporters Association and Towel Manufacturers Association – All Pakistan Textile Mills Association Chairman Aamir Fayyaz said drawback of taxes, as announced by the prime minister against realisation of exports should be processed immediately. He said the amount to be disbursed over the last three months is estimated at Rs30 billion (Rs 10 billion per month) against the export package of Rs180 billion spread over 18 months period.

He said the FBR has exercised unjust tactics to delay refund payment of exporters for the 2016-17 tax period, as it has issued instructions for rolling back of RPOs to all the chief commissioners. He said any such situation would cause serious liquidity crunch for exporters and manufacturers for processing further export orders.

Pakistan Hosiery Manufacturers Association Chairman Adil Butt criticised the government asked the finance minister to apologize for not fulfilling the commitments with the industry. He said the government made several commitments on different occasions to facilitate the industry, including payment of sales tax refunds and PM’s Rs180 billion export package, but not a single promise was fulfilled unfortunately. He said the PM’s package for the export-oriented industries will not meet the target unless exporters’ outstanding refunds are cleared along with the release of funds under the PM’s package without any delay. He said that hosiery exporters have not received their rebates and their major portion of working capital is stuck up with the Customs Department.

The PHMA chairman said, “Benefit of GSP Plus move from the European Union had been virtually nullified due to our in-competiveness as compared with Bangladesh, India, Sri Lanka and China.” The declining Euro had thrown a big blow on the face of industry and thus the exporters to European countries had to bear big losses. The export package will provide support to the dwindling textile export sector and can put it on right track, he added.

PRGMEA former chairman Sajid Minhas, addressing the press conference, said the government was losing its credibility with respect to commitments it has made repeatedly to the industry and exporters. He said immediate steps are needed to address the adverse situation arising out of the liquidity crunch, as the exporters are under the threat of losing their export orders.

He pointed out that the prime minister had announced export-led growth package on January 10, 2017. Three months have been passed so far and no payment has been made to exporters against the realisation of exports, he added. He urged the government to act decisively and rescue the value-added textile industry from financial crisis, as worst ever cash flow crunch has brought the largest industry to the verge of disaster.

Although very late, but this step of the government will help the whole textile sector, which had become uncompetitive in the international market due to higher cost of production in Pakistan as compared to regional countries, he added. He urged the prime minister to direct the authorities concerned to start releasing the funds under PM’s package.