LAHORE– All Pakistan Textile Mills Association (APTMA) Punjab Chairman Adil Bashir has urged the government to announce a five-year export policy immediately in order to end the uncertainty.
Commenting on the Federal budget 2020-21, Chairman APTMA Punjab said the APTMA was expecting a reduction in Sales Tax to five per cent if the government was not extending zero-rated status to the export-oriented industry to resolve the liquidity crunch due to stuck up refunds.
Only this one step would also bring the unorganized sector into the tax net, he added.
Furthermore, he said, the textile industry was demanding a reduction in the turnover tax by half to the existing level of 1.5 per cent and enable the industry to compete with regional competitors.
He said APTMA had also asked for the continuation of energy package for export industry to ensure the provision of electricity at 7.5 cents per kWh and RLNG at $6.5 per MMBTU in next budgetary year.
In the outgoing year, he said, the energy package has directly resulted in a volumetric increase of 32 percent of textiles over the last 18 months. This significant increase in volumes has come in a highly competitive international market where unit prices of products have fallen by as much as 26 percent, he added.
According to him, a lot of the major retail chains in the US and EU are filing for bankruptcy as a result of COVID-19 and the remaining ones are forcing up to 30 percent discounts and delayed shipping on orders already placed and in some cases shipped. By all accounts demand for textiles has crashed and is unlikely to attain the previous levels for the foreseeable future. Competition for the remaining market where price levels will be substantially low is likely to be intense.
Under the emerging circumstances, he said, continued provision of regionally competitive energy is absolutely essential if Pakistan is to continue to rely on reasonable export earnings to support its Balance of Payments.
He said Pakistan has a continuing balance of payments crisis and is being financed by local and international borrowing. More debt piling or borrowing is not a feasible solution. Therefore, this challenge can be overcome only by increasing exports, he stressed.
Adil mentioned that the government has clearly stated its intention to promote exports. The government specifically took action to overcome some disadvantages faced by Pakistani exporters such as the provision of regionally competitive energy prices, which were otherwise higher than those of regional, and competitor countries.
In the 18-month period when competitive energy prices were implemented, he said, Pakistan’s textile exports increased in real (US$ terms), even though prices per unit values of exports were lower. So even though the external environment was not favourable, textile exporters were able to compete in international markets and achieved increased exports which would otherwise have fallen by over $3 billion per year necessitating increased borrowing.
Chairman APTMA Punjab has expressed the hope that the government would announce the export policy without delay to attract fresh investment in the export-oriented sector, create jobs and put an end to the uncertainty about the continuity of government policies.— PRESS RELEASE
