KARACHI: In the throes of Pakistan’s worst economic crisis, a Karachi-based textile unit has announced to lock its doors, signaling a larger collapse in the country’s export industry as other companies brace for a similar fortune, exporters said on Wednesday.
In an official handout issued on July 1, 2024, Naz Textiles (Private) Ltd informed its workers to find jobs somewhere else as the company is facing huge losses from lack of orders.
“Till July 31 will be your last day and all your dues will be paid by August 10,” it told the workers.
Confirming the factory closure, Muhammad Javed Bilwani, the Chief Coordinator for All Export Associations of Pakistan, told Business Recorder that mammoth taxation, high fuel, electricity and gas tariffs have pulled down the industrial productions.
He warned that more and more industrial units are going to succumb to the economic chaos in the country, saying that a big picture will signal the exact scenario with exports nosediving within the next six months.
“Several industries are going to close down operations once they complete their pre-budget exports orders,” he said, adding that along the general public, no one from the business community including exporters are satisfied.
The taxation burden, he said, has weakened the industry to run at full scale, resulting in lowering output with ever soaring costs. The government has levied the exports sectors with a huge taxation up to “42 percent” but shunned a mechanism to make refunds.
“This is the worst kind of a government I have ever seen to lead the country with its poor economic decisions to an inevitable turmoil,” he said, adding that the coalition rule has also scraped the “export facilitation scheme” (EFS) for the ailing exports industry.
The governments replaced three different supporting programs including MB, DTRE and EOU with the EFS, which eventually saw an axe, leaving the exports sectors insecure, completely, he said and feared that a huge refunds backlog will dwindle the exporters’ finances.
“A super tax at 10 percent is applied on profit in Normal Tax Regime, meaning the tax rate reaches 29 percent with an addition of 10 percent to a total 39 percent tax,” the Chief Coordinator, APEA said that the exports sectors are striving with a total 41 percent tax including 2 percent workers welfare fund.
“The budget taxation plans have brought a big joy to RTOs, as officials held extravagant parties to express their euphoria,” Bilwani said that the industry and other businesses are at their historic ebb whereas the tax officers seeing it as an opportunity for manipulation.
“This budget will be historically remembered. Even reversing the decision will not help as confidence is lost. It’s all over for textile players across all supply chain. In fact for industrialization as a whole,” Bilwani said.
He warned the ruling coalition of its taxation plans will ruin the exports sectors and help grow the imports as a result, saying that the country is fast running to becoming a trading nation. He saw “a complete chaos ahead with no signs of relief in sight”.
When contacted, Naz Textiles, HR Manager - Fahim confirmed the handout has been distributed amongst the workers but denied the company’s closure as saying “hopefully it will continue working after July 31”.
Replying to a question, he said the company has removed one of its two general managers and the handout was just an internal notice with that reference. He said that the company has no plans to close its operations.
According to the handout: The company has informed all its staff about its decision to seek alternative jobs, as it offers a one-month period till July 31, aiming to ensure the employees could avoid any potential hardships for new positions.
After years of concerted efforts to sustain the operations, the company has regretfully concluded that continuing them are no longer viable.
The company is facing a lack of orders and a doubling of production costs, which have resulted in substantial financial losses. Despite the company’s consistent performance in the past, current circumstances have led to a significant downturn.
Copyright Business Recorder, 2024
Comments