Exporters repeatedly requested the government to take them on board before the announcement of promissory notes in lieu of tax refunds, but was not taken on board. This was stated by Central Chairman Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) Ijaz Khokhar while speaking to Business Recorder.
Khokhar however acknowledged that exporters had given up any hope of getting their refund claims cleared, but the government announcement of issuing promissory notes given them new confidence. He added that the modalities will become clear after the promissory notes.
Talking to Business Recorder representatives of different exporters termed the government decision to issue promissory notes for clearance of backlog of Rs 200 billion stuck-up tax refunds a "good start" adding that they would be in a better position to comment once the scheme's modalities are known.
Kokhar also stated that the mini-budget has not provided any incentives for marketing Pakistani products abroad to encourage exports. All Pakistan Textile Mills Association (APTMA) leader Gohar Ijaz said that failure to clear refunds for the past five years was tantamount to exporters' money being stuck and the government, for the first time, has shown a will to clear refunds and improve exporters' liquidity.
"But there is no schedule given by the government as to when and how the promissory notes would be issued and whether it would be in the form of sovereign bonds or some other form therefore greater clarity is required," Ijaz added.
Pakistan Hosiery Manufacturers & Exporters Association (PHMA), Central Chairman, Muhammad Jawed Bilwani appreciated government effort to honour its promise to facilitate five zero rated export sectors and to clear refunds by announcing the issuance of promissory notes at an annual profit of 10 percent with a maturity period of three years - notes which will be transferable and redeemable after maturity, for clearance of backlog of Rs200 billion stuck-up refunds which would ensure liquidity for exporters.
Bilwani said the government has given due consideration to exporters' proposals by introducing separate tariffs for gas and electricity for five zero rated export sectors.
He expressed the hope that the government will also come up with a plan to release payment against duty drawback claims under PM Export Package at the earliest as it is critical to encourage exports.
"Abolishing advance tax on filers on cash withdrawal and sale of banking instruments is also appreciated as previously exporters were paying the tax and later applied for adjustment which was much delayed," he added. Knitwear garment sector's share in the global market is 30 percent. During the last six months of current fiscal year, Pakistan's knitwear garments exports have grown by 10.5 percent. Bilwani pledged that upon receipt of payments against refunds and with assurances of uninterrupted supply of gas and electricity, this sub-sector will increase its exports by 20 percent in the next six months.
Under the Finance Supplementary (Second Amendment) Act, 2019, the promissory notes shall be issued by the Note Office in lieu of sales tax refunds as found admissible under the Sales Tax Act, 1990 to the refund claimants. The notes shall be printed by Pakistan Security Printing Corporation with security features and in the form as the Board may determine. The promissory notes shall be approved securities for calculating the statutory liquidity reserve. The promissory notes shall be accepted by the banks as collateral.