Five export-oriented sectors on Wednesday warned the federal government of a countrywide protest if it failed to reinstate the zero-rated regime to value-added textile, carpet, surgical, sports goods and leather trade.
The exporters also alerted the government to the fallout of its proposed plan to scale up the existing general sales tax on exports from three percent, saying that the proposition would plunge the highly labour sheltering and foreign exchange earning sectors into a deep financial chaos.
"The five [previously] zero-rated export sectors are united to fight for the zero-rated regime restoration," Chief Co-ordinator, Five Export Sectors' Associations, Muhammad Javed Bilwani told a joint press conference held at the PHMA House. He warned the government of a street agitation with labourers if exporters were not provided with their Rs350 billion refunds.
The previous democratic government of PPP placed the two percent sales tax on exports just on the eve of caretaker set-up ahead of the election, which the incumbent government had increased to three percent, he said. The government is considering a proposal, which the industry had found through a newspaper, to raise the tax further, he showed disappointment.
Bilwani also slammed the government for failing to materialise its package to the industry, saying "the package confined just to an official announcement," and there had been no headway to help the ailing export sectors rejuvenate in a bid to compete with the country's top textile rivals including India and Bangladesh on the world markets.
The country during the current fiscal year lost $2.5 billion trade loss, he said, adding that the country's rival nations were mounting their exports on the global markets. The Federal Commerce Ministry claimed to boost up the country's exports by 13 percent, he said that such an imaginary growth could not take place without providing infrastructure, energy and other facilities to the manufacturing sectors.
He censured the political parties for failing to help the nation grow its economy despite having a democracy in the country. "What kind of democracy is that? Politicians cry for democracy, claiming the democracy will grow and develop the country," he maintained, saying that the democratic governments had badly disappointed the trade sector.
Showing concerns, he said that there had been nowhere in the world to place a VAT, GST or any such taxes on kids garments but in Pakistan. "Here is 36 percent tax on children wears," Bilwani pointed out, saying that the fall in cotton yield by 32 percent this year would result in a further textile export decline. "The cotton production fall negates the government's claim on export growth by 13 percent," he said.
Chairman Council of All Pakistan Textile Associations, Muhammad Zubair Motiwala said that the exporters' mammoth refunds withheld by the FBR had caused the manufacturing sector a virtually financial setback. He said that Pakistan's exports over the last five years had scaled back by almost four percent but its competitors had grown phenomenally.
"During last five years the exports of Pakistan have declined by 3.73 percent while the exports of our regional competing countries have increased - Bangladesh by 36.12 percent, Vietnam by 67.23 percent and India by 24.23 percent," he said, asking the government to revisit its economic policy toward the export-oriented sectors. "The government has miserably failed time and again. The government has accepted it is short of liquidity to repay," he said, adding that the country's continuing export fall was a sheer cause of the government imposition of three percent sales tax, leading to a backlogging of Rs350 billion as refunds with the tax office.
He said that the five export sectors were highly documented, giving statistics of their foreign trades as "99 percent sports goods are exported, 95 percent carpets, 90 percent surgical goods, 90 percent leather products and 80 textile products". He said that the country's five export sectors were engaged mainly in foreign trade and sales tax on their shipments was unjustified.
Expressing fears, Motiwala said that the country was falling away its cotton production with every few years' passage. He said that the country's cotton production in 2011 had been 10.6 million bales that slumped to 7.2 million in 2015 with a 'huge' decline of 32 percent. But, India suffered only three percent fall in cotton yield over the same period from 29 million bales in 2011 to 28 million bales in 2015, he added.
He demanded of the government to put regulatory duty on export of cotton yarn to help ease the supply of raw material for the manufacturing of the value-added textiles. He said that the government should also end its duties on import of cotton yarn to overcome the textile exports crisis. "You will never be able to pay the refunds what you can do is to provide input including energy at tariffs equal to those the competing countries were providing to their industries," he asked the government.
Patron-in-Chief, Pakistan Leather Garments Association, Fawad Ijaz Khan said that the government's lack of interest in solving the export-oriented sectors problems had brought the manufacturing sectors to a financial mire. "Refund delay is causing a serious liquidity crunch for the export sectors," he said and blamed the tax office for corruption through backlogging of sales tax and other duties refunds. "The FBR is manipulating the revenue statistics that causes troubles to exporters," he said.
Representatives of other associations attended the press conference including Rehan Hannan, Chairman, Pakistan Tanners Association, Muhammad Naeem Khokhar, Senior Vice Chairman - Carpet Association, Abdul Rasheed Fodderwala, Chairman, PHMA, Kamran Chandna, Chairman, PAKSEA, Moin A Razzak, Chairman TMA, Zulfiqar Ali Chaudhry, Chairman, APTPMA, Abdus Samad, Chairman, PCMA, Hafiz Sohail Ahmed, APBUMA, Usman, Former Chairman, PCFA, Rafiq Godil, Former Chairman, PAKSEA, Arshad Aziz, Former Chairman, PRGMEA, Javed Akhtar, PCFA, Saleem Parekh, Former Chairman, PHMA, Akhtar Yunus, Former Chairman, PHMA, Abdul Jabbar Gajiani, Senior Vice Chairman, PHMA, Altaf Hussain, PHMA, Riaz Ahmed, PHMA, Tariq Munir, PHMA and Muhammad Shafi, PHMA.