Exporters warn Punjab cess will raise costs

Apparel industry urges CM to reconsider 0.9% infrastructure levy

LAHORE:

The Pakistan Hosiery Manufacturers and Exporters Association (PHMA) North Zone on Monday sent a letter to Punjab Chief Minister Maryam Nawaz, expressing reservations about the proposed 0.9% infrastructure development cess and urging the provincial government to reconsider the plan.

It cautioned that the levy could significantly increase export costs and create new hurdles for the apparel industry. PHMA North Zone Chairman Abdul Hameed said the association had formally conveyed concerns of apparel exporters to the chief minister, highlighting that the proposed cess on goods entering or leaving Punjab had already created serious anxiety among business circles.

He said exporters were already operating under extremely challenging conditions and the introduction of another levy could further strain the industry, which was struggling to remain competitive in international markets.

According to Hameed, the value-added apparel export sector is currently facing multiple challenges, including high energy tariffs, rising raw material prices and a heavy tax burden at both federal and provincial levels. In such circumstances, imposing an additional cess will inevitably increase the cost of doing business and make it more difficult for exporters to compete globally.

Former PHMA North chief Naseer Butt explained that apparel exporters operated on thin margins because international prices were largely determined by global buyers and intense competition. As a result, the exporters cannot simply pass on additional taxes to overseas customers.

"Taxes imposed locally cannot be exported to international buyers. Any additional levy directly reduces the already narrow margins of exporters and weakens the competitiveness of Pakistani apparel in global markets," Butt said.

He added that the proposed cess would not only impact exports but could also have wider economic consequences for the domestic trade and consumers. Increased costs associated with the movement of goods into and out of the province will likely lead to higher prices, further contributing to inflationary pressures.

The PHMA chairman emphasised that the apparel sector was one of Pakistan's key export industries and played a vital role in generating foreign exchange and providing employment to a large workforce connected with the value-added textile supply chain. "At a time when the country urgently needs to expand exports and industrial activity, policy measures should focus on facilitating the exporters and reducing the cost of production rather than introducing additional levies," he said.

Abdul Hameed also expressed concern about the proposed enforcement and monitoring procedures associated with the infrastructure cess. He warned that checking goods and export cargo at provincial boundaries could slow the movement of shipments and create unnecessary delays in the supply chain.