All Pakistan Textile Mills Association (APTMA) Acting Chairman Naveed Gulzar has termed the federal budget an effort to increase revenue by almost 40 percent owing to stringent conditions from the IMF. He said APTMA had proposed the government to bring down cost of doing business, ensure uniform and regionally competitive energy across the country, and minimum burden on liquidity of the industry.
He expressed his concerns that the prevailing interest rate regime would stuck up liquidity of the industry and removal of zero-rating regime by introducing 17 percent GST on the supply chain for the exporting sector would adversely impact manufacturing. He said the industry was not in a position to deposit Rs 600 billion as input tax followed by its withdrawal in the shape of refund, the industry would get choke due to the scarcity of funds, he warned. He said a continuation of zero-rating would have far-reaching impact on the growth of industry as the industry was undertaking new investment initiatives to produce exportable surplus.
He said the government had agreed with the industry to impose 7.5 percent GST on the exporting industry but it has deviated from its commitment by imposing 17 percent. He has demanded of meeting the commitment with the industry in order to ensure its viability. Also, he said an increase in the turnover tax to 1.50 from 1.25 percent would hit the industry hard, which was already making huge losses. Furthermore, he said, the income tax refund of the industry had already been piled up with the FBR and the present raise would play havoc with the industry.
He said the industry hoped that the refund rules would be user-friendly and linked with a mechanism of refund immediate after the shipment. The exporting industry deserves the initiatives equal to the regional competitors. It is equally important to overcome the current account deficit and the government should come up with innovative ways to make industry viable and sustainable through a long term policy for local and foreign investors. He apprehended that the short term measures to increase revenue would block the growth of industrialization in the country and only investment-oriented measures, including availability of raw materials, fast-track completion of Special Economic Zones (SEZs), an efficient refund mechanism against the exports and minimum adverse impact of taxation and their drawbacks against exports, would help increase exports.
The APTMA appreciates continuation of comparative energy solution for exporting industry for next six months and hope this to continue further under textile policy, he concluded.