Releasing liquidity: Hosiery industry seeks scrapping of export surcharge

Says government already has Rs26 billion in its coffers

KARACHI: The Pakistan Hosiery Manufacturers and Exporters Association (PHMA) has urged the government to abolish 0.25% Export Development Surcharge which is deducted from export proceeds.

“The government has already accumulated Rs26 billion in its kitty under the Export Development Fund (EDF) whereas it disburses approximately Rs1.5 billion annually for export development,” Pakistan Apparel Forum Chairman Jawed Bilwani said on Tuesday.

He was speaking during a meeting of the National Assembly Standing Committee on Textile Industry, chaired by Member National Assembly (MNA) Haji Muhammad Akram Ansari at the PHMA House, says a press release.



“We believe the surcharge on exports must be abolished and a trade development surcharge be levied on imports of luxury items such as cars, cosmetics, etc. This will help exporters to use cash liquidity for enhancing the exports,” added Bilwani.

Drawing a comparison with regional rivals, he told the committee that in 1990, Pakistan’s textile exports stood at $3.67 billion, Bangladesh exported textile worth $0.98 billion and India earned $4.71 billion. However, in 2016, exports of Pakistan stood at $12.45 billion with 239% growth, Bangladesh’s exports totalled $27.49 billion with 2,705% surge and India’s exports were $37.65 billion with 699% growth.

Similarly in 1991, according to Bilwani, cotton production in Pakistan stood at 12.8 million bales and India produced 9.7 million bales. In 2016, Pakistan’s output totalled 9.7 million bales with 24% decrease whereas India produced 33.8 million bales, up 248%.

“We warned the government in every meeting that vital exports will further plunge if the cost of doing business was not brought on a par with regional competitors,” he added.

Representatives of value-added textile associations said the government should bring gas and power tariffs as well as wages in line with those of regional competitors to make them competitive in the international market.

The government must declare the exporters a separate sector in the tariff structure for gas and power, they suggested.

They also demanded that the refund of sales tax on packaging material should be paid on a fixed percentage basis and be released along with export proceeds through the State Bank of Pakistan (SBP) as the entire exercise was now being done electronically.

All Customs rebate claims are settled and paid through the SBP at the time of realisation and payment of export proceeds.

The exporters also asked the government to allow stitching units to import raw material under the Duty and Tax Remission for Export (DTRE) scheme. At present, they cannot import raw material under the DTRE system.

Published in The Express Tribune, January 18^th, 2017.

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