KARACHI: As against the government claim to facilitate exporters to boost country’s exports, some 2,102 small and medium exporters have reportedly closed down their businesses in the last two years, following severe liquidity crunch, primarily due to pending tax refunds for years.
A total 6,817 textile exporters were registered in Fiscal year 2017-18, which has come down to 4,715 in FY2020-21, depicting a sharp reduction of 2,102 exporters, Jawed Bilwani, Chairman, Pakistan Apparel Forum told Business Recorder on the sidelines of post budget 2021-22 joint press conference of the value added textile exporters at PHMA House on Monday.
He said that with the continuation 17 percent GST in 2021-22, many more Small and medium textile exporters who managed to survive last year, are now feared to close their businesses in the wake of liquidity pressure. 17 percent GST on exports and refund after months is the key hurdle in the boost in exports, he said.
He said the Government export friendly policy and announcement in the Federal Budget to continue the support to the export sector shall remain meaningless and fruitless unless the major demands of value added textile exporters regarding taxation matters are not provided.
While addressing the press conference the value-added textile associations representatives urged the Government to restore the zero rating of GST - No Payment No Refund Regime if not possible to reduce GST rate from 17 percent to 5 percent at least, reduce WHT from 1 percent to 0.5 percent, suspend collection of EDF surcharge, allow import of plant & machinery at zero percent for manufacturer and withdraw section 203(A) Power to arrest and prosecute and request the Finance Minister for immediate meeting.
Tariq Munir, Chairman (SZ) and Faisal Mehboob Sheikh, Chairman (NZ), Pakistan Hosiery Manufacturers & Exporters Association, Rafiq Godil, Chairman, Pakistan Knitwear and Sweater Exporters Association Abdus Samad, Chairman, Pakistan Cloth Merchants Association, Muhammad Naqi Bari, Chairman Pakistan Readymade Garments Manufacturer and Exporters Association, Zulfiqar Ch, Chairman, All Pakistan Textile Processing Mills Association, Engr Bilal, Vice-Chairman, All Pakistan Bedsheets & Upholstery Manufacturers Association, Farrukh Iqbal, Vice-Chairman PHMA, Dr Khurram Tariq, Amjad Khawaja, and Syed Zia Alamdar, Former President FCCI participated in the Joint Press Conference.
They requested the Finance Minister for immediate meeting to brief the consequences due to non-consideration of their genuine and pragmatic demands to maintain the pace of export growth.
They were of the view that the Federal Budget 2021-22 in general perspective, is better as compared to previous budgets, however, the textile exporters’ most anticipated demands for restoration of Zero Rating of GST - No Payment No Refund System, reduce WHT rate to 0.5% and suspension of EDF surcharge in Budget 2021-22 was not given deserving consideration which has spread dissatisfaction and annoyance.
They appreciated that Government has reduced / exempted Custom Duty (CD), Additional Customs Duty (ACD) and Regulatory Duty (RD) on import of goods falling under 589 PCT codes to incentivise the textile industry. However, CD, ACD & RD on Disperse dyes PCT 3204.1100, VAT Dyes PCT 3204.1590, Reactive dyes 3204.1600 and Liquid (Pigments) 3204.1720 has not reduced / exempted. Secondly, Under umbrella Export Facilitation Scheme, exemption on import and zero-rating on local supplies in respect of raw materials, components, parts and plant and machinery to authorised exporters was proposed and Bond to Bond Transfer of goods through WeBOC without prior approval of the Collector is being proposed to be allowed. However, exemption of utilities - supply of electricity and gas was not proposed. Under streamline measures of Income Tax: eliminated requirement of filing of application for automated issuance of refund, introduction of time limitation for disposal of show cause notices, automated issuance of exemption certificates if application is not disposed by Commissioner within 15 days, removal of requirement of updating tax profile and delegation of power of Federal Government to Board with the approval of Federal Minister in-charge.
It is relevant to mention here that the value added textile sector has also submitted to the Government for reduction and fixation of tariffs of electricity, indigenous gas & RLNG which was not addressed.
Further Government has allocated Rs20 billion for DLTL Scheme, However, case of DLTL amounting to Rs32 billion are pending with SBP and ready for payments to release, they said.
As per our calculation, Government should increase allocation for DLTL Scheme to Rs75 billion for clearance of backlog and new DDT / DLTL claims. In budget, fund allocated for zero rated industry / export oriented industry regarding concessionary tariff of power, gas and RLNG is short and inappropriate. No grants have been allocated for release of old refund claims of exporters which are billions of rupees.
Copyright Business Recorder, 2021