Interest on loans, returns, energy bills: Textile industry seeks relief for a quarter

The country's textile industry has sought extension in payment of interest on loans/advances, date for sales tax returns and deferment of energy bills for March and April for at least one quarter.

These demands were made in letters to Minister for Energy Advisor Finance, Advisor Commerce, Governor State Bank of Pakistan and Chairman FBR.

Textile industry maintains that the future outlook for textile markets is extremely bleak where currently, the bulk of the export orders already stand cancelled and where not cancelled, the foreign buyers are asking long-term extended credits.

Western analysts have unequivocally classified textiles as one of the markets that would take years to recover to its pre-Covid turnovers as textiles is not an essential commodity and consumer preferences will necessarily change for the worse on non-essential consumer goods, once the markets reopen.

The domestic market for all practical purposes has completely collapsed with little hope that it would recover to 50 per cent of its pre-Covid levels even by the end of the year.

The cash flow crisis is even more acute for indirect exporters who have not been paid anything out of the releases for sales tax/DLTC, etc.

"As a matter of record these indirect exporters have not been paid a dime over the last three weeks and are unlikely to receive any payment of salaries and wages ( even vide the new loan scheme), interest charges, energy bills and supplies of intermediate products and raw materials. Indirect exporters or manufacturers of intermediate products are already in this crisis situation," said Executive Director Aptma, Shahid Sattar, adding that in the absence of any cash flow either from export or domestic sales, it is simply not possible to make payments for interest on all types of loans/advances for the quarter ended March 31, 2020 under the current very grave circumstances

Aptma requested Governor SBP to defer payment of interest on all types of financing for one quarter at least.

The Association further stated that in the absence of any cash flow either from export or domestic sales, it is simply not possible to make payments for RLNG/gas and electricity for al least the next three months, hence payment of bills be deferred for at least one quarter.

In the letter to Chairperson FBR, Aptma said that it is possible to make payments for sales tax of January, February and March due on April 15, 2020, requesting extension in date of sales tax returns and payments for textile sector by at least a month.

In a letter to Secretary Commerce, Sardar Ahmed Nawaz Sukhera, textile industry has stated that the validity of certificates issued by FBR for special energy rates were valid till March 30, 2020. Under the current Covid-19 created circumstance extension of validity of these certificates to June 30, 2020 is critical.