LAHORE - Opposing the FBR plan to withdraw Sales Tax Zero-Rating from certain export items on the excuse of generating more revenue, Pakistan Tanners Association central chairman Agha Saiddain has said that insane decision would adversely affect exports at a time when huge amount of Sales Tax Refunds are already stuck up with the FBR and exporters are facing liquidity crunch.

The government may study export policies of India, China and Bangladesh where exporters are facilitated through export-friendly policies, he said and added that FBR should announce export friendly policies instead of creating difficulties for the industry.

PTA central chairman said that Pakistan leather products export volume can be escalated to $3 billion from existing worth of about $1.04 billion if government takes all stakeholders on board and finalise export policies with their consultations. He asked the authorities to take representatives of export-oriented industries on board for evolving an effective and result-oriented trade and export policies that could help achieve desire goal of increasing exports.

In a statement issued here on Friday, he warned the FBR Chairman Ali Arshad Hakim against revision of zero-rating scheme, keeping in mind the existing huge trade gap of $21.271 billion, as during 2011–12 total exports of Pakistan were $23.641 billion against total imports of $44.912 billion.

“This huge trade gap has resulted into inflation and devaluation of Pak Rupee. If zero-rating from five sectors i.e. textile, leather, carpets, sports, and surgical is withdrawn it will adversely affect our exports,” he said. Agha further added that huge amount of sales tax refunds are stuck up with FBR and exporters are already in liquidity crunch. Withdrawal of zero-rating will further add insult into the injury, he observed.

He gave an example of leather sector in South Asia where China, India and Bangladesh recorded growth rate of 47pc, 40pc, 71pc respectively in last five years whereas in Pakistan exports of leather sector declined by 14pc.

Agha while comparing with India said that Duty Draw Back Rates in India are 6pc, 9.2pc, 9.8pc, and 7.7pc, for finished leather, leather footwear, leather garment, and leather gloves respectively as against DDB in Pakistan 0.82pc, 1.82pc, 4.26pc, and 1.54pc respectively.

Agha said how DDB can be higher in India where most of the inputs like chemical, etc are indigenous. He stressed for export friendly policies to stop flight of Capital and to save the industry.