Export industry: PHMA seeks continuation of existing concessionary energy tariffs

LAHORE: The Pakistan Hosiery Manufacturers Association (PHMA) has demanded a level-playing field with regional competitors through continuation of existing concessionary energy tariffs for the export industry, terming the government’s proposed decisions to discontinue the tariff concession for five export-oriented sectors unwise and disastrous for exporters.

PHMA Zonal Chairman Naseer Butt cautioned the government saying the move of increasing energy tariffs was unwise and would sabotage hard efforts of exporters to enhance Pakistan’s exports in previous years. He asked the prime minister and his economic team to ensure a level-playing field by offering competitive energy tariffs and continuing the Duty Drawback of Local Taxes and Levies scheme, as committed in the new five-year textile and apparel policy.

He stressed that energy rates for industries should be brought at par or below the tariff prevailing in the competing regional countries.

The PHMA zonal chief pointed out that to enable the textile industry to compete effectively against regional countries, electricity rates of Rs 19.99 per unit and re-gasified liquefied natural gas (RLNG) rates of $ 9 mmbtu should continue.

Utility rates of industrial sector should be reviewed on an annual basis and if rates in the regional countries fall, the tariff for domestic utilities should also be brought at par with it, he said. If RLNG rates are reduced internationally from existing level, then this benefit should be passed on to manufacturers and exporters in the textile value chain.

He added that the Duty Drawback of Taxes (DDT) and Drawback of Local Taxes and Levy (DLTL) schemes were introduced by the government due to exporters’ demand to redeem their local taxes paid on export consignments because earlier there were no taxes and levies on exports.

Hence, reimbursement of DDT and DLTL to exporters is not an incentive from the government rather it is the amount paid back to traders against taxes, he added.

He said that the exports are important source of foreign currency and play a crucial role in its balance of payments. Exports contribute directly to GDP growth, employment generation and provide the only sustainable long-term solution. Pakistan’s exports have seen an upward trend especially during FY20-FY22 where textile exports grew by a phenomenal 55% in just two years.

Focus on export growth necessarily involves promoting textiles as this sector contributes 62% of all exports. Pakistan’s textile industry, however, is facing a major crisis as it is rapidly losing credibility and competitiveness in the global market.

The $ 19.3 billion industry, which relies heavily on exports, is experiencing a decline in global shipments. This situation is causing concern among its loyal international customers, who are becoming increasingly skeptical about the industry’s ability to meet deadlines and fulfill orders in a timely manner.

The situation is further compounded by the shortage of dollars and basic raw materials which is causing many exporters to hesitate when booking new orders. As a result of which, the future of the industry looks uncertain, and unless measures are taken to address these challenges, the textile sector in Pakistan may continue to face a downward spiral. Expanding our exports especially in the textile sector and removing all hurdles in this regard should be of utmost importance. Naseer Butt warned the government that any imprudent decision to discontinue the concessional power tariff for five export-oriented sectors will be disastrous for the country’s economy.

Copyright Business Recorder, 2023