LAHORE: The Spot Rate Committee of the Karachi Cotton Association (KCA) on Friday decreased the spot rate by Rs 500 per maund and closed it at Rs 15,000 per maund.
The local cotton market remained bearish and the trading volume remained low because of the rains in the cotton belt of Sindh and Punjab.
Cotton Analyst Naseem Usman told Business Recorder that the rate of cotton in Sindh is in between Rs 13,500 to Rs 14,200 per maund. The rate of cotton in Punjab is in between Rs 15,000 to Rs 16,000 per maund. The rate of Phutti in Sindh is in between Rs 5000 to Rs 5500 per 40 Kg. The rate of Phutti in Punjab is in between Rs 6000 to Rs 7000 per 40 Kg
1600 bales of Sanghar were sold at Rs 13,800 to Rs 14,500 per maund, 1400 bales of Shahdad Pur were sold at Rs 14000 to Rs 15000 per maund, 1200 bales of Tando Adam were sold at Rs 14,000 to Rs 14,500 per maund, 600 bales of Hyderabad were sold at Rs 14,000 per maund, 400 bales of Mian Channu, 400 bales of Vehari and 200 bales of Chichawatni were sold at Rs 15,800 to Rs 16,500 per maund.
Pakistan Readymade Garments Manufacturers and Exporters Association (Prgmea) on Thursday conveyed its reservations to Finance Minister Miftah Ismail over the imposition of the supertax on the industry, pleading that now the industry will pay a total of 39 percent tax including 29 percent corporate tax and 10 percent supertax.
Federal Minister for Finance and Revenue Ismail held a meeting with the delegation of Prgmea headed by its Chairman Shaikh Luqman Amin at the Finance Division on Thursday. Rana Ihsan Afzal, coordinator to the PM on Commerce and Industry, the FBR chairman, and senior officers from the Finance Division and the FBR attended the meeting.
The industry was also represented by Ijaz Khokhar and Mubashir Naseer Butt before the Ministry of Finance.
The delegation highlighting the contribution of garments in the exports of Pakistan apprised about issues related to taxation on value-added garments, refund of sales tax, etc. Issues of defer payments, the DLTL, and GSP plus status were also discussed in the meeting.
The apparel sector lies at the apex of the textile value chain and exporting up to $7.6 billion apparel products and the sector has a huge scope of expansion.
Ismail expressed the resolve of the present government to promote business activities and facilitate the business community to attain sustainable growth in the country. He assured the delegation to resolve their issues at priority and also stressed the delegation to enhance export base.
The minister was informed that a new tax under the caption of “Supertax on high earning persons” has been imposed under section 4C which shall now be applicable to all taxpayers, individuals, AOP and companies. The industry requested to remove the imposition of 10 per cent super tax on large industries; which already pay hefty corporate tax of 29 per cent and generate millions of jobs in the country as well. No country in the world can charge 39 per cent tax to corporations and still keep the economy afloat. Additionally, new private-sector and foreign investments dry up completely in an uncompetitive market, as it will simply affect a huge number of end-users of the garments industry. Therefore, the government should broaden the tax net instead of burdening the existing ones. Exporters should be given an exemption for the growth of the economy and exports.
All stuck-up claims of the exporters (DLTL, DDT, Customs Rebates, Sales Tax rebates, etc) should be released. The liquidity crunch is a major stumbling block in the way of improving exports. The whole industry may break down amid a delay in the release of sales tax refunds. Exporters are suffering a lot for no payment of already issued RPO’s for sales tax, the finance minister was informed.
An important amendment targeting the final tax regime businesses, particularly for exporters, is made. A new section 4A has been inserted which provide that the exporter shall not be entitled to take credit of any sum as in excess of imputable income. The imputable income on work back formula as devised under section 2(28A) ranges from three per cent to five per cent of export. If profit of any exporter exceeds three per cent to five per cent range then he is required to submit the financial statements duly audited by a Chartered Accountant. Even after the submission of audited accounts, the officer has the authority to make sure that ‘the excess amount is reasonably attributed to the business activities’. This amendment shall have far-reaching effect on exporter and Sialkot being an export city shall be the main target by the FBR. This amendment resumed already omitted the infamous section 169(4) which compels the taxpayers to take credit of the imputed income rather than actual, industry explained to the finance minister.
The textile industry is faced with countless opportunities to capture greater market share, but reforms in energy, technological upgradation, diversification and value addition will be necessary in order to enhance the potential of the sector and facilitate economic growth at unprecedented levels.
One thing is very crystal clear that if we want to increase exports of our country, we must need a level playing field as per our regional competitor countries, then we will be able to compete in the international market.
The DDT notification issuance is pending for the period from 1st July 2021 to onward. To realise the objective of facilitation/promotion of exports, we request to issue the DDT notification at the earliest. It will boost the exports of the textile industry. Pakistan’s textile sector especially SMEs have seen to go through different challenges. So, the government must provide some relief to the SMEs.
Furthermore, the industry requested the finance minister to announce a decent percentage of drawback rate of incentive without a condition of increment with simple procedure and paperless working instead of other subsidies as it will reduce the cost of doing business and will provide relief to the industry to make them regionally competitive.
The industry also informed that the markup rate for exporters has been increased by 235 per cent under export refinance. This is a major source of expense for exporters, Pakistan needs exports to bridge the current account deficit and with such massive increases in expenses it would become extremely difficult.
GSP+ is the lifeline for the exports of Pakistan, it needs a lot more from the government to maintain the status for the future. We need to build the image of Pakistan internationally and Foreign Ministry should be involved in this as well. We simply cannot afford any problems with the GSP+ status, and the Pakistani Government should be actively lobbying for this.
ICE cotton fell more than 4% to trade limit down on Thursday, hurt by a stronger dollar and weak US export sales data, which dented demand outlook for the natural fibre.
Cotton contracts for December were last down 3.24 cents, or 3.9%, at 84.48 cents per lb at 12:02 p.m. ET. The contract hit its lowest since May 2021.
“We just didn’t have really any strong export sales at all and we need to have at least 300,000 bales or so to keep up,” said Kansas-based commodity analyst Sid Love.
US Department of Agriculture’s weekly export sales report showed net sales of 10,200 running bales of cotton for 2021/2022, down 73% from the previous week and 68% from the prior 4-week average
The dollar resumed its relentless rise charting new highs, making cotton more expensive for overseas buyers.
Further weighing down on prices, Chicago wheat and soybeans fell following reports of progress in talks to create a safe corridor for ships carrying Ukraine’s cereal and oilseed exports.
The Spot Rate Committee of the Karachi Cotton Association on Friday decreased the spot rate by Rs 500 per maund and closed it at Rs 15,000 per maund. The Polyester Fiber was available at Rs 325 per kg.
Copyright Business Recorder, 2022
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