Pakistan Textile Exporters Association (PTEA) has urged the government to immediately remove the major irritants in export growth. Extreme cash flow crunch is gradually eroding the biggest job providing textile export sector; consequently sizeable textile capacity had been severely impaired. Government should accord preferential treatment in upcoming budget to boost the exports and generate industrial activities.
Talking to the media here on Wednesday, PTEA chairman Mian Shaiq Jawed stressed for immediate payment of stuck up liquidity in refund cycle as extreme cash flow crunch is causing major dent to country's exports. He said in order to accelerate the export pace, government allowed duty drawback of taxes on export proceeds of textile value chain last year but sufficient funds have not yet been transferred to the State Bank and the exporters are still deprived of the benefits of incentive scheme. Due to short releases of funds, half of the incentives of Textile Policy (2009-14) are still yet to be disbursed as outstanding claims of technology upgrade fund amounts to Rs 10 billion and claims of mark up support stands at Rs 10 billion from last 4 years.
Highlighting the huge pendency in sales tax refund regime, he said outstanding refunds under section 66 are Rs 10 billion; whereas deferred amounts has reached to Rs 19 billion and regular claims till January 2018 are of Rs 17 billion. Similarly Rs 8.5 billion are pending on account of custom duty claims.
He demanded immediate payment of all outstanding refund claims to boost the exports. FBR should evolve mechanism for ending practical hassles, liquidity problems of refund claimants and frivolous litigation pertaining to refunds, he said. In Finance bill 2016, zero rated regime was revamped; however refund on packaging material was disallowed. Such disallowance is adding 1.5 percent to 2 percent additional financial impact on exports and accumulative incidence of the restriction comes to PKR 13 Billion. He demanded that refund on packaging material may be allowed in upcoming budget.
Pointing out the heavy duties on coal import, he said an Advance Income Tax @ 5.5 percent and custom duty @ 5 percent is levied on import of coal across the board. Coal fired machines worth billions of rupees were installed in the textile industry particularly in Punjab to cope with the energy crisis; however heavy duties on coal at import stage are adding the financial burden. He demanded to allow coal import under SRO 327 for export oriented textile industry.
Pointing out the issue of subsequent recovery proceedings against blacklisting of supplier on a subsequent stage, he said it was principally agreed at different forums that supplier status at the time of transaction / supplies will be reckoned for initiation of recovery proceedings.
He stressed for amendment in Sales Tax Act and Sales Tax Rules and termed high production cost is a strong barrier block in export growth. High priced energy / fuel create a chain effect to ultimately increase production cost of export goods as industries in Punjab are supplied high priced RLNG based on USD based tariff; whereas industries in other provinces are supplied system gas based on PKR tariff. He demanded equal prices of gas @ PKR 600/MMBTU for the industry across the country and withdrawal of surcharges of PKR 3.6/kwh to bring power tariff at par with regional rates PKR 7/kwh.
PTEA vice chairman Ammar Saeed was of the view that industrial production is not in accordance with the built up manufacturing capacity. Due to this underutilisation, the country is not fetching the full potential of foreign exchange earnings. There is need to enhance the industrial production to accelerate economic growth and generate vast opportunities of employment. He demanded that government should concentrate upon some truly visionary steps and address genuine concerns of the industry with innovation and bring extraordinary solutions in the upcoming budget.