Muhamamd Javaid Aslam, Chairman of Pakistan Hosiery Manufacturers Association (PHMA) (North Zone) has said that export-oriented value-added sector is battling for its survival in the face of stiff competition from neighbouring and other countries in the international market and the rising costs of doing business with a large number of industries closing down, leading to mass unemployment of skilled and unskilled labour including large number of female workers.
Talking to newsmen, he said that unemployment has assumed gigantic proportions and is indeed threatening the fabric of Pakistan, resulting in lawlessness, crimes and large scale terrorist activities, which must be tackled urgently and effectively.
In this context, he said that the present government's bold agenda against the ills of unemployment and noble mission for its obliteration is welcomed most vigorously by trade and industry.
He said: "For an effective management and implementation of the programme to generate employment and most pragmatic government policies tremendous support and working on war footing would be required and along with the trade and industry, we at Pakistan Hosiery Manufacturers Association, which is one of the leading and prominent trade organisation representing knitwear and hosiery manufacturers with exports over $1.964 billion, would be committed to share the vision and cooperate with the government towards these most constructive efforts."
He said that at present this sector is battling for its survival. Commenting on the zero rating purchase of raw materials and inputs for garment manufacturing and exporting units, he said that at present knitwear industry is heavily burdened with indirect withholding taxes of pre-production: ginning @ 1 percent, spinning @ 0.5 percent, knitting @ 1 percent, processing @ 1 percent, and outsource stitching @ 1 percent.
In addition, he said, there are post-garment processes which include embroidery; garment washing; garment printing; decoration of sequins etc, taxation on which also affect the cost of the product.
He suggested that the whole chain of supplies falling under pre-production and post production of garments should be under withholding tax regime at the lowest possible at every stage and all accumulated income tax turnover taxes are paid back to the manufacturer-cum-exporter on exports.
Javaid said that research and development support for the garment manufacturing and exporting units is @ of 6 percent up to June 30, 2007 and thereafter 6 percent extended up to June 30, 2008. He demanded that with the aim to boost and enhance exports and exceed export target, such R&D support should be allowed for exports to all countries of the world.
He said that research and development work is not for a short period to achieve the required targeted goals of exports hence this R&D Support should be available at @ 9 percent until 2015. Further, he said that no research and development support should be granted for fabrics because this will benefit other competitors who will import fabric from Pakistan and compete with Pakistan.
About waiving of 1 percent withholding tax on exports of value-added apparels and made ups, he said that presently withholding tax is charged @ 1 percent on export proceeds. He demanded that withholding tax should be reduced to zero percent for the knitwear industry for a period of at least 7 years to revive this industry from present crisis.
At present, knitwear manufacturers-cum-exporters are the highest value earner of per pound value of cotton generating the highest rate of employment and contributing highest foreign exchange earning to the nation, converting the raw material into final product with multiple value-additions in the shortest period of only 60 days.
Gas tariff to the knitwear manufacturer-cum-exporters should be similar with that given to fertiliser industry @ Rs 36.77 per MMBTU and this should be incorporated in the Ogra gas tariff rates and the exporters be paid back the cost difference of spinning/weaving/ knitting/processing roughly amounting to 5 percent of the fob value, he added.
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