Chairman All Pakistan Textile Mills Association Aamir Fayyaz has urged the government to continue with zero rating regimes in next budget to revive industrial viability and encourage investment. He said any move to withdraw zero rating regime for the five exporting sectors would tantamount to devastating impact on the growth of textile industry in Pakistan.
He said the Federal Finance Minister Ishaq Dar had introduced this regime after threadbare discussion to help the five export-oriented sectors that had become uncompetitive in the region due to escalating cost of doing business. It was further analyzed that it was beyond the exporter's means to acquire taxable inputs and keep waiting for refund. In fact it was agreed that government would finally move to no tax-no refund arrangement for exporters. He further added that such regime worked successfully when it was originally introduced in 2005 and went a long way in boosting exports in those years.
Regarding the increase in refunds amount, he said, the exporters maintain inventories of four to five months depending upon the volume of their exports. He said the FBR may plug the loopholes or take steps to remove any lacunae where refunds are on the rise against current purchases. But it would be premature and unfair to withdraw or modify the zero rating regimes for the fault of refund systems or acts of impropriety by certain exporters, he added.
He said it would not be possible for exporters to continue their business with taxable inputs. He said the zero rating regimes should be kept intact and the Board may take necessary steps to make it fool-proof and workable. He said the government had introduced zero rating regimes to the five exporting sectors, including the textile, to avoid the burden of refund claims from the manufacturers/ exporters. However, since various items are not covered under zero rate regime yet and being procured by the industry needed to be treated under the refund claims. If such measure are not introduced in the forthcoming budget it would have serious repercussions on the industry in general and overall economy in particular. Targets of investment growth and export would be difficult to achieve. It is high time for the government to restore confidence of investor industrialists and farmers so that all concerns stakeholders should regain the share it had lost to the international competitors, he added.