25 percent freight subsidy on leather garments exports demanded

Leather garments and made-ups exporters have demanded 25 percent freight subsidy in the upcoming annual budget for 2007-08. The exporters of leather garments and goods have submitted suggestions to the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), to be incorporated in the apex trade body's budget proposals for 2007-08, sources told Business Recorder on Wednesday.
The exporters have proposed that the government should allow 25 percent freight subsidy on export of leather garments and made-ups in the budget, and about Rs 165 million allocation should be made for the subsidy.
They also suggested that the subsidy should be payable only on exports to countries of North and South America, Europe, New Zealand, Australia and Japan.
They also said that leather garments and made-ups industry should be allowed duty-free import of accessories, to the extent of 5 percent of previous year's export performance. This 5 percent may be segregated in to different types of accessories ie zips, buttons, rivets, fusing etc, to discourage misuse. In this way, no exporter can import just one item in a huge quantity for commercial sale, and imports under this facility would be exclusively used for one's own production. The mark-up rate of export refinance should be reduced to 3 percent for at least two years for the industry.
Presently, withholding tax is charged at one percent on the export proceeds. It is recommended that withholding tax should be reduced to zero percent for the industry for a period of two years to save this industry from present crises. The export development surcharge should also be waived for two years. Plants and machinery used by the industry should be exempted from 5 percent customs duty.
One-window operation for labour levies ie social security, old age benefits and education should be provided. An appropriate percentage may be deducted at source at the time of export proceeds realisation, like section 143-B of income tax act. GST being charged on telephone bills should be made claimable, like other inputs.
Rates of utility bills ie electricity, gas and telephone should be brought down to lower the production cost of leather garments/made-ups to compete with the international market. All benefits being given to textile garments industry should also be given to leather garments industry.