Pakistan’s value-added textile sector seek immediate zero-rated regime

The textile industry stakeholders has urged the PM to announce zero rated regime for value added textile industry with immediate effect rather than from July 2016 and issue the bonds for exporters committed by the finance minister with any further delay. They hope the governement will fulfill its commitment this time on time to restore the confidence of the exporters because every passing day is crucial for the industry at a time when export has declined by 20 percent so far.

Pakistan Readymade Garments Manufacturers & Exporters Association (PRGMEA) chief coordinator Ijaz Khokhar said that the government announced several incentives verbally all of which have proved to be a lollypop for the industry, as none of them have been implemented so far.

He said that the government is claiming to actively working on a new scheme of issuing bonds in lieu of pending refunds to the taxpayers particularly exporters. But it does not seem to be materialized like other commitments like announcement of textile package and power tariff cut by Rs3/unit.

The government had claimed to issue bonds within one week period which had passed but no working in this regard came up so far. There is trust deficit between the government and business community which can be removed if finance minister starts consultation with the stakeholders to finalize terms and conditions of bonds.

PRGMEA wants soft-term bonds as this is exporters’ money and not just a borrowing. The value-added textile exporters want their full involvement in the whole working and procedure of bonds release.

And for the long-term the government must include interest at prevailing rate because exporters, who are facing severe liquidity crunch, could borrow money from banks on collateral of bonds,” Khokhar demanded.

PRGMEA SVC Sohail A Sheikh observed that it was unfortunate that none of the relevant ministries bothered to approach the industry for taking any preventive measures to stop freefall of export despite GSP Plus status by the EU.

PRGME requests the PM to intervene personally and take daring steps to save all export oriented industries. He said that zero rated facility would save the exporters from a lot of troubles but it should be notified as early as possible to avoid complications.

Sohail Sheikh also expressed his concerns that most of the promises of the government for support of export oriented sectors remained unfulfilled, therefore notification about zero rating should be issued immediately.

He further said that, apart from sales tax refunds, billions of rupees under the textile policy initiatives like DLTL are still held up for which funds should be released immediately.

It is a matter of concern for the country that despite GSP Plus window, exports of the country are showing declining trend and related workforce is losing their jobs. Exports of country are major source of providing employment and earning foreign exchange for the country but they are under heavy internal and external pressures.

Government need to adopt pro-export policies and ensure their effective implementation so that country could continue its journey to development and prosperity.