PTEA wants extension of rebate regime for two years
Falling exports and high production costs necessitate government support
PHOTO: AFP
FAISALABAD:
The government has been asked to continue the Duty Drawback of Taxes without setting a bar of 10% increase in exports by the Pakistan Textile Exporters’ Association (PTEA).
The incentive was introduced in the prime minister’s export package in January.
Industry representatives estimate that rolling back the incentive would result in a cost increase of 7% for manufacturers of export goods which would put them in a disadvantageous position against regional competitors and hamper the government’s goal to increase exports.
“The textile industry has lost its viability as our exporters are at a comparative disadvantage due to higher production costs,” PTEA Chairman Ajmal Farooq said.
The government allowed a tax rebate of three to six percent on proceeds from textile exports to offset this disadvantage and provide exporters with a competitive edge in global markets. Moreover, the benefit was unconditional and did not require exporters to achieve certain targets to avail the incentive.
Exports of yarn and fabric were eligible for rebates of three percent and four percent, respectively while the rate of rebates on home textiles and readymade garments was five percent and six percent, respectively.
Farooq also requested the government to extend the incentive for two more years to provide exporters with a cushion and reverse the trend of declining exports or at least retain global market share.
He also lamented constant delays in payment of tax rebates to exporters which are creating liquidity problems and reduced production levels. The government currently owes billions of rupees to businessmen in unpaid rebates.
“Export industry is the lifeline of the economy and a continuous drop in exports would spell trouble for it, given the already widening trade deficit,” he said.
Exports tumbled by 3.13 percent to $18.54 billion during July-May 2016-17 from $19.14 billion in the same period of 2015-16. The ballooning deficit may expose vulnerabilities of the economy as financing such a huge gap in the midst of falling exports and stagnant foreign investment is a challenge.
“This trend will lead to added reliance on expensive foreign loans,” he cautioned.
Loans have become a trademark of the current regime with the government often turning to international lenders to shore up foreign exchange reserves that get continuously drained due to increasing imports and debt servicing.
Published in The Express Tribune, July 4th, 2017.
The government has been asked to continue the Duty Drawback of Taxes without setting a bar of 10% increase in exports by the Pakistan Textile Exporters’ Association (PTEA).
The incentive was introduced in the prime minister’s export package in January.
Industry representatives estimate that rolling back the incentive would result in a cost increase of 7% for manufacturers of export goods which would put them in a disadvantageous position against regional competitors and hamper the government’s goal to increase exports.
“The textile industry has lost its viability as our exporters are at a comparative disadvantage due to higher production costs,” PTEA Chairman Ajmal Farooq said.
The government allowed a tax rebate of three to six percent on proceeds from textile exports to offset this disadvantage and provide exporters with a competitive edge in global markets. Moreover, the benefit was unconditional and did not require exporters to achieve certain targets to avail the incentive.
Exports of yarn and fabric were eligible for rebates of three percent and four percent, respectively while the rate of rebates on home textiles and readymade garments was five percent and six percent, respectively.
Farooq also requested the government to extend the incentive for two more years to provide exporters with a cushion and reverse the trend of declining exports or at least retain global market share.
He also lamented constant delays in payment of tax rebates to exporters which are creating liquidity problems and reduced production levels. The government currently owes billions of rupees to businessmen in unpaid rebates.
“Export industry is the lifeline of the economy and a continuous drop in exports would spell trouble for it, given the already widening trade deficit,” he said.
Exports tumbled by 3.13 percent to $18.54 billion during July-May 2016-17 from $19.14 billion in the same period of 2015-16. The ballooning deficit may expose vulnerabilities of the economy as financing such a huge gap in the midst of falling exports and stagnant foreign investment is a challenge.
“This trend will lead to added reliance on expensive foreign loans,” he cautioned.
Loans have become a trademark of the current regime with the government often turning to international lenders to shore up foreign exchange reserves that get continuously drained due to increasing imports and debt servicing.
Published in The Express Tribune, July 4th, 2017.