LAHORE - Demanding the restoration of zero-rating regime for export oriented value-added textile sector, the value-added textile industry has said that decision of zero-rating withdrawal has adversely affected exports at a time when huge amount of Sales Tax Refunds are already stuck up with the FBR and exporters are facing liquidity crunch.

In a letter sent to Federal Secretary Textile Industry Rukhsana Shah, the industry representatives said that the government may study export policies of India, China and Bangladesh where exporters are facilitated through export-friendly policies, saying that FBR should announce export friendly policies instead of creating difficulties for the industry.

“Due to energy shortfall, major chunk of finance is diverted to develop energy infrastructure like wood and coal boilers that squeezed financial streams breading cash flow jerks. This has been even more intensified by delaying refund of sales tax and suspension of RND payments. There are several cases in manual system of refund that are yet to be refunded and in CREST it takes around 4-5 months for refund. Withdrawal of Zero-rating the material used in apparel and made-ups has mitigated this liquidity crunch.”

They said that Pakistan apparel products export volume can be escalated from existing worth of about $8 billion if government takes all stakeholders on board and finalise export policies with their consultations. They 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.

Pakistan Readymade Garments Manufacturers & Exporters Association senior vice chairman Jawwad Ahmad Chaudhry condemned revision of zero-rating scheme, at a time of huge trade gap of $21.27 billion, as during last fiscal year total exports of Pakistan were $23.641billion against total imports of $44.92 billion.

“This huge trade gap has resulted into inflation and devaluation of Pak Rupee. Withdrawal of zero-rating from five sectors i.e. textile, leather, carpets, sports, and surgical will adversely affect our exports,” he said.  Mr. Jawwad 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 stressed for export friendly policies to stop flight of Capital and to save the industry. The letter further said that energy crises have terribly hampered the industrial growth, which has generated several implications. This has slowed down the GDP and relocation of this industry ultimately contributing towards massive un-employment, disparities and industrial default rate. The energy deficiencies have diverted foreign investment that is one of the major indicators and factor in economic development of a country.

To emancipate from this quagmire generated by energy shortfall, the government has to take concrete measures for un-interrupted supply of electricity and gas to apparel industry and to all its supporting sectors, the letter concluded.