The All Pakistan Textile Mills Association has appealed to Prime Minister Imran Khan and Advisor to Prime Minister on Commerce, Textiles and Industry Abdul Razak Dawood to announce immediate relief for the industry as shipments to Europe and the USA are being deferred or cancelled on account of closure of international borders due to threats of Coronavirus.
APTMA Punjab Chairman Adil Bashir while talking to Business Recorder said that this will lead to a buildup of inventory and non-payment against L/C's. Our exports to these countries exceed $10 billion and deferment by three months mean $ 2.5 billion of export proceeds not coming in or at least being delayed by up to 6 months. He demanded that in this situation the government should immediately pay all sales tax claims and other dues of industry. It should suspend further sales tax collection (zero rating at least for the time being), ensure availability of cheap credit for the business/industrial sector and reduce interest rate in line with other countries of the world.
He urged the government to ensure continuation of supply of energy on competitive rates as a long term policy and slash the interest rate to single digit if they want to achieve export target of 28 billion dollars in five years time by 2025, especially in the wake of Coronavirus pandemic hitting the economies of world hard.
While sharing his concerns, Adil said in this situation the cash flow crisis is likely to be so severe that many companies will find it impossible to maintain operations which will result in both bankruptcies and massive layoffs of workers. This recession is a collapse of aggregate demand of the world and the same is likely to be far more severe than 2008/09.
He said other countries are combating the situation through massive injection of funds through outright grants, ensuring availability of cheap credit to industry and businesses cutting short the documentation process normally associated and deferment of all government dues and taxes.
Adil also said that industry in Pakistan is already cash strapped due to the sales tax system which has transferred Rs 120 billion from the industry to FBR coffers. The FBR has partially processed claims till November 2019 while three months further have also passed. They have paid a total of Rs 31 billion till date against estimate of total collection of Rs 154 billion.
He demanded that the government should focus on implementing the long term policies which includes provision of electricity at 7.5 US cents per Kwh for long term to export-oriented sectors, if the government wants the country to benefit from the Generalized Scheme of Preferences (GSP+) status extended by European Commission till 2022. He further said since the grant of GSP Plus, Pakistan's exports to the European Union have enhanced from 3,401 million euros in 2013 to 5,514 million euros in 2018, registering an increase of 62 percent.
Welcoming the approval of the relief package by the Economic Coordination Committee (ECC) of the Cabinet, Adil said that textile exports could be doubled over the next five year if the government overcomes the high energy pricing, gas connection and tax refund issues. The APTMA has demanded a long-term five-year textile policy from the government. "Once the government announces the policy, the textile exports will start growing at 10-15% per annum over the next five years," he added.
Adil said that local production of cotton is estimated to be 8.5 million bales. It is expected that Pakistan has to import 5.5 million bales to cover the short fall. As a result of the progressive policies and personal interest of the prime minister, especially by providing regionally competitive energy tariffs, the textile industry has become viable after remaining in the red for 10 long years, he added. He said the textile industry has achieved a record increase of 26 percent growth in quantitative terms although this did not directly reflect in the dollar amounts due to a substantial worldwide decrease in textile prices.
Comments
Comments are closed.