LAHORE -  Exporters of Leather in Punjab, especially in Lahore and Multan, are facing the worst-ever crisis due to complete stoppage of cheques of duty drawback claims.

Pakistan Tanners’ Association Northern Zone Chairman Azam Malik said that exporters of Lahore and Multan are badly hit by liquidity crisis which is worsening due to held up of their funds in duty drawback refunds. Respective collectorates are unable to release pending cheques against sanctioned claims of duty drawback.

“It is irony of fact that in the chase of unrealistic revenue targets the duty drawback claims of exporters are being held up in the system”, Malik said. The PTA (North) chairman said that association has numerous meetings with the collectors concerned but of no use. Their chase of un-realistic revenue targets disabling them to release duty drawback claims for which no authority in Federal Board of Revenue (FBR) is holding them responsible.

Installation of expensive online web-based clearing systems could not enable FBR to expeditiously release exporters’ money which is being held up to meeting the ‘so-called’ revenue targets. Presently, an amount more than Rs300 million is lying pending at Collectorate of Customs (Preventive) Lahore on account of duty drawback payable against consignments dispatched for exports from Lahore airport during the past one year.

Explaining the scenario, Malik explained that despite expensive cost of air freights, exporters of leather in Lahore prefer dispatching leather consignments for exports through airport, being an efficient way to meet the strict deadlines of customers abroad importing leather from Pakistan. At the same time all Lahore-based leather manufacturing units are importing chemicals and spares from Karachi sea port and paying all duties and taxes in Karachi and this revenue should be considered for Lahore-based units when fixing revenue targets.

Here, it is a disappointing fact for the leather exporters of Lahore which are being asked to route their imports to Lahore dry ports in order to generate revenue for Lahore Collectorates. He expounded that in the absence of efficient consignment handling system at Lahore dry ports, it is unviable for a leather manufacturing-exporting house at Lahore to arrange imports through Lahore dry ports. Moreover, levy of Provincial Infrastructure Development Cess (@ 0.9% + 1.05%) by Punjab and Sindh governments respectively, adds significant cost hence discouraged imports at dry ports.

Malik urged the government to pay attention on 33 percent decline in leather exports during the past 19 months. He also compared Bangladesh’s leather export, which has posted an increase of 12.2 percent in the last seven months of 2016-17 whereas, leather exports of Pakistan declined by 7.50 percent in the same period. Regional countries are promoting and helping exports to grow but FBR is holding exporters own funds of rebates and sales tax to show higher reserves and neglecting exports, he added.

“Custom collectorates, which are liable to pay these amounts to exporters, are busy in targeting revenue for the government but they do not prioritise refunds to our exporters due to shortage of funds round the year,” he said.

“Lahore and Karachi are under one federal unit and FBR cannot force exporters to import or export from any particular port or dry port thereby linking revenue generation with payment of export rebate. These are anti export policies and killing the leather industry which have fallen prey to these rigid policies not focusing on export enhancement. Our regional countries have taken our markets and our exports are being destroyed while their exports are on continuous increase. Eventually, such policies will leave drastic effects on trade deficit and unemployment in the country,” he added.

Malik proposed that Lahore and Multan collectorates should be declared as Export collectorates like Sumbriyal. Along with revenue targets, FBR should give rebate targets to Lahore and Multan collectorates in order to facilitate leather exporters from Lahore and Multan, he added.