Textile sector irked by FBR’s inefficiency

Advises reinstatement of zero-rating regime.


Our Correspondent January 18, 2014
Huge amounts of Sales Tax Refunds are already stuck with the Federal Board of Revenue and exporters are facing a liquidity crunch. PHOTO: RASHID AJMERI/EXPRESS/FILE

LAHORE:


Demanding restoration of the zero-rating regime for the textile sector, Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) Senior VC Jawwad Ahmad Chaudhry has said that the decision to withdraw zero-rating has adversely affected exports.


At a time when huge amounts of Sales Tax Refunds are already stuck up with the Federal Board of Revenue and exporters facing a liquidity crunch, Chaudhry said zero-rating needed to be restored.

In a letter sent to Federal Secretary Textile Industry Rukhsana Shah, the PRGMEA chief advised the government and the FBR to announce export-friendly policies instead of creating difficulties for the industry.

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“Due to the energy shortfall, a major chunk of our finances is diverted to develop energy infrastructure like wood and coal boilers that squeeze our financial streams,” said Chaudhry. “This has been intensified by the delay in refund of sales tax and suspension of research and development payments. There are several cases in the manual system of refund that are yet to be handed back and in CREST it takes around four to five months for refunds.”

Chaudhry said that the export volume of Pakistan’s apparel products can be increased from the existing $8 billion if the government takes all stakeholders on board and finalises export policies after consultations.

He condemned revision of the zero-rating scheme at a time when the country has a trade gap of $21.27 billion.

“This huge trade gap has resulted in inflation and the devaluation of the Pakistani rupee. The withdrawal of zero-rating from the textile, leather, carpets, sports, and surgical good sectors will adversely affect our exports.”

He stressed at export-friendly policies to stop the flight of capital and save the industry.

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The letter added that the energy crisis has terribly hampered industrial growth, creating several implications including slowing down GDP growth and forcing industries to relocate contributing to massive un-employment, disparities and industrial default rate. The energy shortfall has also diverted foreign investment away from Pakistan.

To recover from the crisis, the government has to take concrete measures for un-interrupted supply of electricity and gas to the apparel industry and to all its supporting sectors, the letter concluded.

Published in The Express Tribune, January 19th, 2014.

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