Zero-rated regime: PHMA calls for its early implementation

Wants govt to take immediate action to arrest declining receipts from exports

KARACHI: Like the textile industry in general, the Pakistan Hosiery Manufacturers and Exporters Association (PHMA) has also urged the government to immediately implement its decision of a zero-rating system for the export sector from April 1 instead of delaying till July 2016.

“Pakistan’s exports are declining at a rapid pace, and the trend is expected to continue in the current scenario,” stated a letter written by the PHMA and sent to the prime minister. “The country cannot afford delaying the zero-duty regime for the export sector.”

Exporters have long been complaining of stuck refunds causing a liquidity crunch, while declining profit margins also take their toll. This situation coincides with falling exports that has caused Pakistan’s trade deficit to widen by over 4% in the July-February period of the ongoing fiscal year.

The PHMA letter stated that exporters would be inclined to hold off their proceeds before the zero-rated regime kicks in after July, a situation that would further worsen the trade gap.

“This is the main reason that we propose the government to implement the regime from April 1, 2016 to supplement exports in the remaining three months of current fiscal year 2015-16,” added the letter.

The letter also suggested other ways of helping exporters, including bringing down the electricity and gas prices at par with regional competitors and declaring the export sector as a separate head of account in the tariff structure.

The PHMA also took a swipe at the liberal provincial policy of declaring holidays, adding that it greatly hurts the production schedule, especially of the export manufacturing units.

Meanwhile, the PHMA said the government already has Rs26 billion in its kitty for export development, while spending only Rs1.5 billion a year in actual disbursement.

“In view of this fact, the government should stop taking Export Development Surcharge from export proceeds until the accumulated amount of Rs23 billion is disbursed and exhausted.”

Published in The Express Tribune, March 15^th, 2016.

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