The country's value-added textile sector has rejected the government's consideration of custom rebate and cash subsidies, fearing the move would further hurt the real exporters. The sector also demands of the government to appoint a textile minister to help the ailing industry revive, without any delays. They said that the government should evolve a plan to help the industry scaled down its manufacturing cost and enable it to compete with the competitors on the global markets.
Scores of the value-added textile associations under the umbrella of CAPTA (Council of All Pakistan Textile Associations) showed fears in a letter, made available to Business Recorder on Wednesday, to Federal Finance Minister, Ishaq Dar over the proposed cash incentives and custom rebate move.
"We understand that the Government is considering Customs Rebate and Cash Subsidies. Customs Rebate and Cash Subsidies lead to non-bonafide, over invoicing and paper shipment, which most unfortunately defeats the very idea of reviving the industry and enhancing genuine exports as fake exporters get advantage of such schemes and paper shipments take place which ultimately creates problems for genuine exporters," the letter says.
The letter asks the government to reconsider its proposition since such a move in the past has proven unviable to the entire textile sector and would help the 'unscrupulous elements' as a result. "History is full of such cases of fraud which can be witnessed in the FBR. Customs Rebate and any cash subsidy only encourage our foreign buyers for asking for similar discount," it adds.
Instead of cash incentives, the CAPTA urges, the government to help reduce the input cost, which is more effective way to provide a financial relief to the export sector. It adds that the government should step up to curb smuggling and under-invoicing. It says that the FBR has a system through which the government can scale down the manufacturing cost including gas and electricity rates for the export sector.
"Tariff of Gas, Power and Wages should be brought down at par with regional competitors to make us competitive in the international market and this will benefit the entire manufacturing chain and declare export sector as separate head of account in tariff structure of Gas and Power," it says, asking the government to reduce water tariff in Karachi at par with rates that of other cities in the country. It claims that water tariffs are the 'most' exorbitant in the metropolis.
"It is proposed that all Custom Rebate Claims are settled and paid through State Bank of Pakistan at the time of realisation and payment of Export Proceeds. This should also be done efficiently as impact of Custom Rebate is below one percent of total amount," It demands that the government should decide a fixed percentage of sales on the packing material and should be refunded along with the exports proceeds through the SBP, as the entire exercise is now being done electronically.
"Currently WHT is charged at various levels and items such as import of raw material, cash withdrawal from bank, registration of new vehicles etc. A portion of it is adjusted against WWF while the balance is kept outstanding and refunded after one year. Exporters fall under final tax regime u/s 143(b) and should be exempted from payment of WHT and be given Exemption Certificates OR amount of withholding tax should be adjusted in input. Currently payment against Workers Welfare Fund (WWF) is collected at rate of 2 percent of profit. WWF rate should be reduced to 1% (from current 2%) for the exporters," it says.
It also demands of the government to spend Rs 26 billion funds on the textile sector's growth, which it collects through Export Development Surcharge of 0.25 percent by deducting from export proceeds of the exporters. "The Government already has Rs 26 billion funds in its kitty for Export Development while it spends yearly only Rs 1.5 billion approx. in disbursement of funds for export development," it maintains.
It also advises the government to initiate levying a Trade Development Surcharge on the import of luxury items and abolish the Export Development Fund, which is being imposed on exports. "We propose that EDF on exports must be abolished and a Trade Development Surcharge be levied on imported luxury items such as cars, soap, shampoo, cosmetics etc. / finished goods. This would also help our exporters in using the cash liquidity for enhancement of the exports of our nation," the letter says.
It asks that the import of raw materials should not be subjected to any duty / regulatory duty. "Globally, there is no duty on import of Raw Material and duty always is imposed on export of Raw Materials," it says, adding that the import of yarn should be permitted for manufacturing of export-oriented goods. "Currently manufacturing (stitching) units cannot import raw material under DTRE. Manufacturing (stitching) units should be allowed to import raw material under DTRE," it demands.
The letter was initiated by Zubair Motiwala, Chairman, CAPTA, and others including Muhammad Jawed Bilwani, Chairman Pakistan Apparel Forum, Muhammad Haroon Shamsi, Chairman (SZ), Towel Manufacturers Association, Amir Lakhani, Chairman (SZ), Pakistan Readymade Knitwear & Sweater Exporters Association, Khawaja Muhammad Usman, Chairman, Pakistan Cotton Fashion Apparel Manufacturers & Exporters Association, Irfan Bawany, Central Chairman, Pakistan Hosiery Manufacturers & Exporters Association, Riaz Ahmed, Chairman (SZ), Pakistan Hosiery Manufacturers & Exporters Association, Rafiq Godil, Chairman, Pakistan Knitwear & Sweater Exporters Association, Amjad Jalil, Chairman (Karachi Region), All Pakistan Textile Processing Mills Association and Muhammad Abid Chinoy, Chairman, Pakistan Cloth Merchants' Association.
Comments
Comments are closed for this article.