Non-payment of refunds block huge working capital: TMAP

Towel Manufactures' Association of Pakistan has expressed deep concern over the deteriorating economic situation with special reference to exports which are going down day by day.

In a press release, the association said the main reason behind decline in towel exports is blockade of exporters' huge working capital under the head of sales tax refund due to which exporters are unable to procure material/input for manufacturing goods meant for exports.

Rupees 25 billion gets stuck with the government every month. Recently, the FBR started releasing refunds against sales tax for July 2019 but the beneficiaries are very limited and majority of exporters is still looking towards the FBR for their refunds. Rupees 75 billion against refunds is lying with the FBR for August and exporters are in a fix as there is no sign of relief. It was promised that refunds will be paid within 72 hours. Due to prevailing conditions, exports of towel during September shrank by 12 percent as compared to August 2019.

"We are afraid if such situation continues it will lead to mass scale closure of textile industries including towel, which will ultimately affect forex reserves and trigger massive unemployment in the country."

Bonds issued to exporters through the CDC are just a piece of paper as these bonds were issued without framing proper rules and regulation, the association maintained.

Custom duty, duty drawback, DLTL, DDT, etc, are some of the hurdles which exporters are facing for long time. The association urged the government to feel the gravity of the situation and take remedial measures at the earliest.-PR