In view of problems it faces, garment industry may close down: PRGMEA

LAHORE: The Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) has warned that in the face of continued delay in sales tax refunds and unofficial restrictions on import of raw material the garment industry would stop running gradually, leading to inordinate delay in export orders and damaging the reputation of Pakistan, as several units have already slashed their productions because they are in a difficult situation in the face of growing currency crisis.

PRGMEA Central Chairman Mubashar Naseer Butt and Vice Chairman Wasim Akhtar Khan, in a joint statement, said though the central bank has officially removed restrictions on import of raw material under Customs tariff chapter 84, 85, but practically the constraints still continued to haunt the garment industry, leading to severe shortage of industry raw material in the country, as the authorities have not been fulfilling their commitments in spite of several reminders and meetings.

We are facing severe liquidity crunch due to undue delays in release of our own money in the form of stuck up refunds, besides the barriers created by the SBP in connivance with the commercial banks to open LCs to proceed export shipment, said PRGMEA Chairman.

Mubashar Naseer Butt observed that the value-added textile industry is facing hurdle to get the meagre amount of just $10,000 against the export of $100,000, which is unfortunate for the country, as commercial banks are refusing to provide dollars to the exporters on the plea of shortage of greenback and SBP is totally unable to take any action against them.

Moreover, consignments of industry raw material remained stuck at the port despite the government had lifted the ban on the import. The PRGMEA Chairman observed that the business community was expecting that the imports restrictions will be relaxed as soon as the country receives instalment of the IMF loan but it is unfortunate that the situation has not changed so for mainly due to mismanagement of the authorities.

The PRGMEA Chairman also expressed his distress over the performance of the FBR’s refunds system, as sales tax refund claims are mounting due to irresponsible approach of the authorities concerned, who are unable to explain the reason of this delay.

Mubashar Naseer Butt urged the government to immediately release refunds claims of the textile industry, as the government had committed that the exporters’ refunds payment orders would be issued in 24 hours while refunds would be cleared within 72 hours of the issuance of the RPOs, but practically this commitment is not being fulfilled, as the 72 hours are being extended to several months.

He said the government needs to take immediate measures to arrest the slowdown in textile exports, as these policies would bring Pakistan’s most valuable sector on the verge of collapse.

PRGMEA Vice Chairman Wasim Akhtar demanded the continuation of the previous transparent, speedy and trust worthy culture of sales tax refunds of the exporters. He said that exporters are unable to procure and purchase raw materials and other accessories to fulfil their future export orders and this will ultimately collapse the entire export trade.

He pointed out that the government had created a culture of trust among the business community by paying refunds timely and regularly, which was appreciable but the situation has now changed. The industry is presently facing gaps and the authorities are not ready to give us reason of delay, creating a trust deficit and sending a wrong message to the exporters of the value-added textile industry, which is the backbone of the economy.

Copyright Business Recorder, 2023