Liquidity crunch dents garment exports

Industry body laments delay in refund payment orders

Our Correspondent November 22, 2022


Readymade garment manufacturers are facing an acute liquidity crunch, which is impeding export growth as Pakistan’s textile shipments dipped by 15% in October 2022, said a lobbying group.

“Undue delay in encashment of sales tax refund payment orders (RPOs) by the Federal Board of Revenue (FBR) is adversely impacting export volumes as exporters’ liquidity has already been hit by the global recession,” said Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) in a statement.

Its Central Chairman Mubashar Naseer Butt and Zonal Chairman Waseem Akhtar Khan noted that sales tax refunds of value-added textile exporters had piled up to billions of rupees, hindering their business activities. They pointed to the delay in encashment of RPOs, which were issued after October 3, 2022, while the exporters were also waiting for those deferred payments that were processed under the FASTER system.

“It is leading to the reversal in export growth achieved in the last fiscal year; latest data shows textile exports dropped to $1.35 billion in October 2022 from $1.60 billion in the corresponding period of last year,” they said in the statement. The PRGMEA leaders reminded the government of its earlier commitment that RPOs would be issued within 24 hours while payments would be made within 72 hours after the issuance of RPOs.

“Despite all the commitments, payments are not cleared for several weeks. FBR has failed to release sales tax refunds of the zero-rated export sector within 72 hours,” they lamented.

The textile and apparel industry constitutes 8.5% of Pakistan’s gross domestic product (GDP), employs 40% of the industrial labour force and has more than 60% share in exports. Keeping in view the importance of the sector, the association high-ups pressed the government to take immediate measures to ease the financial stress and prop up exports.

Published in The Express Tribune, November 22nd, 2022.

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