'Textile sector facing tough time due to uncertain policies'

Value Added Textile Exports Associations Thursday claimed that textile sector is facing a tough time due to uncertain economic policies and textile exports will completely collapse leading to enormous flight of capital and massive lay-offs and uncontrolled unemployment, if the government not realise the gravity of situation.

While, addressing a press conference at Karachi, the representatives of the textile industry have also appealed to the Prime Minister to intervene in the matter in the best interest of country and resolve the issues being faced by textile sector. The press conference was jointly addressed by Zubair Motiwala Chairman, Council of All Pakistan Textile Mills Associations, Jawed Bilwani Chairman Pakistan Apparel Forum, Asif Inam Chairman (SZ) All Pakistan Textile Mills Association and Yasin Sadik, Former Chairman APTMA along with others.

Exporters feared that their precious liquidity have been taken away by the government in shape of sales tax and billions of rupees are stuck on account of sales tax refund claims despite the government's assurance that the refunds will not be delayed and will be paid timely through FBR FASTER system.

The value added textile export sector was of the view that the government has failed to refund sales tax claims under FASTER System of textile exporters as per commitment, to refund claim amount in 72 hours, contrarily the govt has not paid exporters' claims for the last seven months.

Approximately some Rs100 billion of textile exporters are held up under FASTER Refund System in last 7 months and total Rs210 billion are withheld with the government. Payment timeline for payment of Customs Rebate claims which previously was reduced to 7 months has again been prolong to a period of 13 months.

Therefore, the government should honour this commitment and immediately restore the zero rating status for the textile export sector as No Payment No Refund Regime to ease their financial needs, they added.

"If the government will not realise the gravity of situation and exporters' refunds are not released on war footing basis, the textile exports will completely collapse leading to enormous flight of capital and massive lay-offs and uncontrolled unemployment," they warned.

They said that it is an alarming situation that Chairman FBR at the time of budget has left due to his acute illness while, as learned, Member IR (Operations) is also not available at FBR Islamabad.

It seems that FBR's harsh policies will completely destroy value added textile export sector if the system is not withdrawn. Government should declare an emergency situation to control the downfall of GDP, rise of inflation and downfall of exports and take all necessary steps to release payments of all pending refund payments of exporters forthwith and restore zero rating (0%) of sales tax - no payment no refund regime and freeze the tariff at its previous position in the larger national interest, they urged.

In next 2-3 months approximately 8-10 percent textile exports may face decline, the Small and Medium Export Industries are in total dire straits and demand immediate attention of the government for their survival, they mentioned.

Value added textile sector further demanded to bring down tariffs of gas, power & water and supply utilities. One crisis after another is seriously mauling the textile sector and the recent announcements of another increase in electricity and Gas charges would render this vital export sector to become most uncompetitive in the international market, they said and added that it is an irony and most surprising that on one side the government wants to reduce the cost of manufacturing of export oriented sectors due to stiff competition from regional countries and on other side increasing utility tariffs.

"This proposed increase in electricity and gas tariff along with several other adverse factors would render the cost of doing business of the Value Added Textile Sector uncompetitive in the International Market against competitors such as Bangladesh, India, Sri Lanka, Vietnam, China, and other competing countries whose cost of doing business is much lower owing to several variance in input costs as compared to Pakistan," they said.

The national textile exports is also starving for regular gas supply as weekly gas closures and low gas pressure have brought negative effects on the export consignments. The export production has crippled and industries remained without gas leading to exporters' failure to meet their export commitments in time, they added.

The Associations have appealed to the Prime Minister to intervene in the matter in the best interest of our exports and foreign exchange earnings and demand a fair gas tariff which is the actual cost of gas minus cross-subsides. They further appealed that announced power tariff of 7.5 cents/kwh including all charges should be implemented in inclusive of all charges across Pakistan including Karachi.