LAHORE: At least Rs 36 billion sales tax refund of the textile industry is laying with the government, causing liquidity problem for the exporters while out of these Rs 36 billion, Rs 13 billion belongs to PHMA.
“This is not justified that the government does not release our sales tax refund while we have to pay markup on the funds availed from the banking sector,” Usman Jawwad Chairman Pakistan Hosiery Manufacturers Association stated this while briefing about the knitwear scenario in an interactive session here at Lahore.
He added that Minister of Finance had announced very loudly in his budget speech that all the ST refunds would be cleared by 30th September 2014 and the improved automated system would ensure refunds within 90 days but his words did not come true.
On energy crisis he said, “Is it not tragic that we are currently refusing orders because of uncertain power and energy scenario in the country and very thing is minimizing our business” he said adding that high cost of doing business in Pakistan has sharply reduced the margins. Sparse availability of electricity and gas he has further reduced production volumes.
Chairman PHMA said that high cost of doing business is only because of inept government policies and its inability to implement its own decisions. He said extra ordinary delay in the sales tax refunds is one example. He said there are exporters that have not received refunds on dozens of their export consignments spread over two years.
He said ensuring full documentation of economy is governments’ job and exports should not be penalized for its failure.
Jawwad said the power supplied by the state is most expensive in the region that enhances cost. Gas he added is sparkly available in Punjab that deprives the industry of producing power at low cost. He regretted that the government has recently subjected furnace oil to addition sales tax increasing the cost of the alternate fuel available for self generation.
Former Chairman PHMA Shahzad Azam Khan advised the government to take the compliance issue of 27 conventions signed with EU to ensure continuity of GSP Plus status.
He urged the government to remove bottlenecks that hamper exports. He said knitwear is the most labor intensive industry of the country. He said about 1200 organized units spread in Karachi, Lahore, Faisalabad and Sialkot are operating in country which is about the same as 15 years back.
He said though export of knitted garments shows an ever growing trend over the past many years but inconsistent government policies and failure to match facilitations provided to this sector by India and Bangladesh has resulted in closure of numerous smaller units.
He said there are certain compliance issues like water treatment plants that are out of reach of small knitwear units. He said despite numerous promises no government has yet installed a common water treatment facility for small knitwear units so that they could qualify for exports.
Former PHMA Chairman North Zone Adil Butt said some features of new textile policy are attractive; He said special rebates on exceeding exports by 10 percent to knitwear exporters should be reduced to any increase in exports to motivate small exporters.
He hoped that the new policy would be implemented with spirit and not shelved like the previous 2009-13 policy after announcement.
