Central Chairman Pakistan Readymade Garments Manufacturers and Exporters Association (Prgmea), Shehzad Salim, on Thursday said the government is taking away all the incentives from the textile sector thus making it impossible for our industry to compete with regional competitors.
In the press statement, he stated that first it was duty drawback of local levies and taxes (DLTL) which was discontinued and billions of rupees worth of exporters claims are still pending and now Export Finance Scheme (EFS) rates are being squeezed. EFS rates of the State Bank of Pakistan are not being lowered since January 2011 despite the interest rates going down. Currently, EFS rate is 10 percent (with max. 1 percent commercial banks' spread), while the key interest rate is 12 percent, therefore there is no incentive for exporters to avail this facility. The State Bank has now linked EFS rates with weighted average yields of last three auctions of 6 months T-Bills. Historically, there was a difference of approx. 3-5 percent between EFS and T-bills yield but presently it has now narrowed down to 1.8 percent. We also raised this issue with the Finance Ministry back in December that EFS rates would also be revised down but so far nothing has been done about it by the government.-PR