Footwear industry: PFMA asks govt to undertake vital policy reforms

LAHORE: The Pakistan Footwear Manufacturing Association (PFMA) has asked the government to undertake vital policy reforms in coming fiscal budget 2020-2021 for suitability of footwear industry.

The association in its budget proposals said that the incentive of local taxes and levies drawback (LTLD) notified vide SRO 711(1)/2018 dated 08 June 2018 be extended for another term of three years (July 2021 to June 2024) and be enhanced to four percent to enable them to position in the international market.

The economy is increasingly driven by import-based consumption. Investment in industry is much less than our neighbouring countries. The only sustainable solution is waiving off additional customs duty and regulatory duty on all raw materials for footwear industry and put them in lowest slab of custom duty, to promote “Made in Pakistan Policy”.

The PFMA in its proposals said that import duties on ready shoes must be fixed in dollar terms irrespective of FOB (freight on board) price. This shall definitely stop under-invoicing. Another positive impact would be on low priced imported shoes, which will be on real value (expensive) resulting in gearing-up of local manufacturers.

Under-invoicing needs to be discouraged through further uniformity in ITP (import trade price) value. It will give a level playing field to local products (vis-à-vis) the imported products custom duty on shoes must be fixed in dollar terms irrespective of FOB price as detailed below. As for the international branded shoes are concerned, their ITP value may be determined by customs authorities as per rules and regulations and custom duty and other taxes are applied at existing rates. It is also suggested to review ITP valuation ruling on half yearly basis to manage the pricing in true sense.

The budget proposals further said that the zero duty regime must be implemented to promote ‘Made in Pakistan’ vision. All machinery and software related to the footwear industry must be exempted from duties under the vision “Made in Pakistan”. Exemption from all taxes on income for enterprises commencing commercial production by the June 30, 2020, in all industrial estates should also be allowed for the next ten years. It is proposed that restoration of tax credit under section 65D for newly established industrial undertakings for a further period of five years.

Copyright Business Recorder, 2021