A parliamentary panel on Tuesday expressed serious concerns over the frequent decrease in country's exports due to non-provision of sales tax refunds and non-availability of basic facilities, rendering the textile sector uncompetitive, besides causing an increase in trade deficit. National Assembly Standing Committee on Textile Industry met with Khawaja Ghulam Rasool Koreja in the chair, which strongly recommended that tariff of gas and power should be brought down at par with regional competitors to make textile sector competitive in the international market.
The Standing Committee on Textile Industry discussed the issue of All Pakistan Textile Associations (APTMA) and exemption of lease charges of Karachi Garment City. APTMA leader Gohar Ijaz informed the committee that 150 textile mills have been closed, rendering thousands of people jobless due to high input cost including gas and electricity prices, overvalued exchange rate and stuck up of refunds claims. Ijaz said that the industry is not going to perform any more in such circumstances and requested the parliamentarians to intervene and resolve their problems.
Chairman APTMA Aamir Fayaz said that 30-35 percent production capacity impaired/closed across the textile value chain. Global market share declined from 2.2 percent to 1.7 percent while unemployment increased by 30 percent. Textile industry lost 15 percent technological edge advantage over competitors. The textile industry is at disadvantage by 25 percent as compared to 12 percent subsidies given to their competitors and seven percent taxes imposed in Pakistan, besides other surcharges. Despite shortage of cotton by 3.8 million bales, four percent customs duty and five percent sales tax were re-imposed and prime minister's export package was reversed.
The committee was informed that the textile sector is facing difficulties in improving the exports which needs to be addressed in order to improve the performance of the sector. The committee expressed its reservations over the closure of 30 to 40 per cent industry due to high tariffs of electricity and gas to value added associations and recommended that tariff of gas, power and wages should be brought down at par with regional competitors to make the textile sector competitive in the international market.
The committee directed the ministry to write a letter to chairman Federal Board of Revenue (FBR) for early release of sales tax refunds to all textile association to strengthen the export of the country. The committee further recommended that implementation report on Prime Minister Package of Rs 180 billion announced for exporters be submitted with the committee on monthly basis. Later the APTMA representatives talked to the media persons outside the Parliament House and demanded early resolution of their problems.
The committee expressed its concerns over the taxes being imposed on Karachi Garment City in terms of advance and withholding tax because it was the project of the federal government. The committee directed that the taxes imposed on Karachi Garment City should be exempted as compared to other provinces. The committee further directed to invite the chairman FBR in the next meeting in order to resolve the said issue.
The committee was informed that textile ministry requested the chief secretary Sindh on 23.04.2013 for grant of waiver on the payment of stamp duty, CVT and registration fee on lease and mutation of the project land as KGC is owned and 100 percent funded by the federal government. Due to delay in taking decision by the government of Sindh in the matter, the ministry decided to approach the federal government for providing required funds for lease charges. On the advice of the ministry, deputy commissioner Malir was approached on 15.04.2015 for providing required challans, who intimated that an amount of Rs 76.326 million is payable in respect of all fee, levies and taxes, etc, on the lease and mutation of land.
Though required funds for the payment of due charges/levies on tease and mutation of 300 acres of land have been made available by the government of Pakistan, formalisation of lease deed is pending with deputy commissioner Malir. Reason for delay in execution of lease deed by DC Malir is reportedly due to stay order granted by the Sindh High Court to Pakistan Steel Mills in a suit filed in 2013 against the Sindh government and others claiming land in Deh Pipri, where land allotted for establishing Karachi Garment City in 2007 is also situated. Until title of project land is transferred in the name of Ministry of Textile Industry/Karachi Garment City Co Ltd after formalisation of lease deed and mutation in the official record of government of Sindh, no development work on the project can be undertaken.
Textile ministry approached the chief secretary Sindh regarding adjudication of stamp duty on 300 acres of land allotted to KGCC project and seeking a copy of letter addressed to Aijaz Hussain Baloch, Inspector General of Registration, Sindh Revenue Board, on the said matter. The reply from the Board of Revenue Sindh received in the ministry under rules for payment of stamp duty. The lease agreement deed was adjudicated under Section 31 of the Stamp Act, 1899 the stamp duty chargeable is under Article 21(I) of the Schedule to the Stamp Act, 1899.
On 23-02-2017, the chairman KGCC met chief minister Sindh in connection with exemption of the lease charges; however, there was no development on the case. Instead, the re-assessed lease charges have been conveyed by the office of the inspector of Registration Office, Karachi. The KGCC has also approached Mintex for Rs 73.431 million to be requested to EDF Secretariat of Ministry of Commerce; however, despite EDF's demands, the KGCC has neither provided the "list of comprehensive activities required to complete the project100 percent" nor has it submitted satisfactory details about fund utilisation report of the EDF funds granted earlier to the company.