Slowdown of global economy from the Covid-19 and backlog of sales tax refunds have deepened the country's textiles sector's financial crisis, bringing it to "the verge disaster", the Value Added Textile Forum (VATF) said on Tuesday.
The Forum's Chief Coordinator, Muhammad Javed Bilwani showed concerns over the FASTER system, which according to him, has been below 'par' to release refunds to the exporters. He said that between 25 percent and 30 percent of the exporters, who filed their claims in July, 2019, have not yet received their refunds. Despite the passage of over 10 months, the FBR's FASTER system still creeps to meet the expectations.
He said that the government has been "unnecessarily" holding the exporters funds, saying that the sales tax of 17 percent has unleashed a "disastrous" effects to the entire textile sector and aggravated liquidity crunch. The government should honor its commitment to restore the zero-rated regime for the five exporting sectors including the textile.
Similarly, Bilwani claimed that exporters, who filed their claims in Feb 2020, have received "only" 35 percent of their refunds and the remaining 65 percent of the amount was carried forward into pending that becomes 12 percent of their running capital. He pointed out that the exporters' margin of profit stands between 5 percent and 8 percent on the global market. He urged the government to ensure restoring the system of 'no payment no refund, and called it mandatory to help restore the very sector.
"SME exporters are worst hit due to liquidity crisis and fearing closure as they have no running capital to operate their industries which once closed shall not be revived," he said that "a huge number of export industries will close down in next few months which will also negatively affect 40 allied industries associated with the textile export industry".
Expressing his fears, he said that the sluggish economy may receive a huge blow from the falling exports in the aftermath of industry closures, appealing to the government to revive the SRO 1125.
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