Export sectors: Rs 100 billion refunds termed 'too little, too late'

The export-oriented sectors have termed Prime Minister Imran Khan's announcement of issuing tax refund of Rs 100 billion "too little, too late", which they say would not adequately help in response to coronavirus challenge. However, exporters have welcomed the State Bank of Pakistan (SBP) decision of reducing the policy rate by a further 150 basis points to 11 percent.
This was the consensus among manufacturers and exporters, while reacting to PM's announcement of disbursing tax refunds worth Rs 100 billion for exporters.
Major demands of exporters including restoration of zero rating facility for the five exports-oriented sectors, and freezing utilities payment were not met, they added.
Shabbir Ahmed, patron-in-chief, Pakistan Bedwear Exporters Association told Business Recorder that the promise of payment of refunds of Rs 100 billion to the entire export sector was just peanuts.
"We have to make payments to the suppliers, and give salaries to the employees, and other cost of production. The timeframe for payment of refunds by the Federal Board of Revenue (FBR) is also yet not clear," he added.
The Council of Textile Association (CTA) Chairman, Zubair Motiwala, said that disbursing Rs 100 billion was not enough for the exports industry. "This is our own money, the government is refunding it to us," said Motiwala, adding that the government had not considered their demand for freezing utilities' bills payment, which was a prime concern of the industry.
He further said that there were other issues such as income tax refunds, customs duties, the DLTL, which were much more than Rs 100 billion.
Motiwala, however said that slashing the policy rate by 150 bps was a welcome decision in the right direction, which would provide stimulus to the economy, and it was a great opportunity to send a positive message to the domestic financial market in restoring its confidence. Pakistan Readymade Garments and Manufacturers and Exporters Association (PRGMEA) Chairman Ijaz Khokhar expressed dissatisfaction over the prime minister's announcement, while saying their major demand for restoring the zero-rating facility for the five export-oriented sectors to avoid liquidity crunch in future was not met.
He said that around Rs 250 billion of five export sectors were stuck with the government on account of blocking refunds, and they were demanding for its releases at once, but the demand was not honored.
Khokhar said that the government had announced to release Rs 100 billion refunds to exporters but no mechanism had been laid down for its release. "In the past such announcements were made but not honoured later," he added.
He further said that the government has yet to notify the agreed rate of 7.5 cents per unit (kWh) for exporters.
He said that reducing the interest rate was a good decision, which would help the major industries but was not going to help the Small and Medium Enterprises (SMEs).
The Union of Small and Medium Enterprises (UNISAME) appreciated the PM for the relief package for the sector, which according to them would reduce the burden on the small to medium entrepreneurs.
UNISAME President Zulfikar Thaver said the PM had considered their four recommendations including concessional loans, reduction in interest rate, relief in taxation rebate payments, and rescheduling of loans.