Exporters urge govt to overcome challenges

Highlight restricted liquidity caused by stuck tax refunds, high energy prices

FAISALABAD: The Pakistan Textile Exporters Association (PTEA) has urged the government to overcome the challenges hampering growth of exports in the country.

The trade body highlighted the restricted liquidity caused by stuck tax refunds, high prices of energy inputs, imposition of duties and taxes on inputs and raw material as factors which are adversely impacting production, employment and exports within the country.

“Global markets are wide open and Pakistan can achieve a significant increase in exports by encouraging investment and enhancing competitiveness,” the associaiton suggested. PTEA Chairman Khurram Mukhtar, in a statement, said the extreme cash flow crunch had squeezed the financial stream of exporters.

“Unavailability of sustainable energy packages have raised the production cost, levy of anti-dumping duty on basic raw material, withdrawal of exemptions from sales tax and federal excise duty (FED) on locally procured inputs have disrupted the supply chain and slowed down the pace of exports,” he remarked.

Tax refunds of over Rs170 billion are stuck in the refund regime including the refund bills for July, he added.

“Furthermore, refunds against provincial sales tax have been pending since 2013, causing extreme financial strain to exporters who have been unable to accelerate industrial growth and raise exports.” Expressing disappointment, he said the mechanisms developed for the issuance of promissory notes against sales tax refunds through the Central Depository Company (CDC) have not yet been defined. “Though legislation has been done for income tax bonds, refund cases are not being processed.”

A discount mechanism must be defined and the rate of profit should be brought in line with the market rate, he urged. In order to cut down production costs of export goods and win a competitive edge over regional rivals, a sustainable energy package (gas/RLNG at $6.5 per mmbtu and electricity at 7.5 cents per kWh) was granted to the zero-rated sectors in October 2018, he said.

“Unfortunately, no subsidy has been provided on gas supply since March 2019 and exporters are being charged normal tariffs.” PTEA Vice Chairman Muhammad Idrees said it was the right time to facilitate the export sector as there was a dire need to stabilise the economy.

Published in The Express Tribune, August 27^th, 2019.

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