Leather exporters of Punjab, especially in Lahore and Multan, are facing the worst crisis due to complete stoppage of cheques of duty drawback claims. Chairman of Pakistan Tanners Association (Northern Zone) Azam Malik said that exporters of Lahore and Multan are badly hit by liquidity crisis that is worsening due to their pending funds of duty drawback claims.
"It is ironic that in chase of unrealistic revenue targets, the duty drawback claims of exporters are being held up in the system," Azam Malik said. The PTA chairman stated that the association has held a number of meetings with the concerned collectors but to no use. Installation of expensive online web-based clearing systems could not enable the FBR to expeditiously release exporters' money withheld in the wait of meeting the so-called 'revenue targets'. Presently, an amount of more than Rs 300 million is lying pending with the collectorate of customs (preventive) Lahore on account of duty drawback payable against consignments dispatched for exports from the Lahore Airport during the past 1 year, he said.
Explaining the scenario, Azam Malik explained that despite expen1sive cost of air freights, exporters of leather in Lahore prefer dispatching leather consignments through airport being an efficient way to meet the strict deadlines of customers abroad. At the same time, all Lahore-based leather manufacturing units are importing chemicals and spares from Karachi seaport and paying all duties and taxes in Karachi. This revenue should be considered for Lahore-based units while fixing revenue targets, he suggested.
It is disappointing for the leather exporters of Lahore who are being asked to route their imports to Lahore dry ports in order to generate revenue for Lahore collectorate. Azam expounded that in the absence of efficient consignment handling system at Lahore dry ports; it is unviable for a leather manufacturing-exporting house at Lahore to arrange imports through Lahore dry ports. Moreover, levy of provincial infrastructure development cess (@0.9% + 1.05%) by Punjab and Sindh governments respectively increases the cost which discourages imports at dry ports upcountry.
Azam Malik invited the government's attention to 33 percent decline in leather exports during the past 19 months. He also compared Bangladesh export of leather which has posted an increase of 12.2 percent in the last seven months of 2016-17 whereas leather exports of Pakistan declined by 7.50 percent in the same period. Regional countries are promoting and helping exports to grow but the FBR is holding exporters' funds of rebates and sales tax to show higher reserves.
However, custom collectorates, who are liable to pay these amounts to exporters, are busy in targeting revenue for government but they do not prioritise refunds to the exporters due to shortage of funds round the year. "Lahore and Karachi are under one federal unit and the FBR cannot force exporters to import or export from any particular port or dry port thereby linking revenue generation with payment of export rebate. These are anti-export policies and killing the leather industry which have fallen prey to these rigid policies. Other countries of the region have taken over our markets and our exports are being destroyed while their exports are on continuous increase. Eventually, such policies will leave drastic effects on trade deficit and unemployment in the country."
Malik proposed that Lahore and Multan collectorates should be declared as export collectorates like Sumbrial. Along with revenue targets, the FBR should give rebate targets to Lahore and Multan collectorates in order to facilitate leather exporters from Lahore and Multan, he said. However, supply of sufficient funds for Lahore and Multan collectorates is the task of paramount exigency without which the second largest exporting industry of Pakistan - the leather - may face consequential export decline.