Textile Exporters Urge Govt to Address Extreme Cash Flow Crisis With Immediate Refund Claims
PTEA Chairman Sohail Pasha says despite extreme crisis, textile industry remained the most export-oriented sector of the economy in last decade, however it needs attention as exports are stagnant
FAISALABAD– Pakistan Textile Exporters Association (PTEA) Thursday urged the government to address extreme cash flow crisis with immediate liquidation of outstanding refunds to steam up the industrialization, boost exports and generate additional jobs.
Global opportunities are emerging and textile industry has the infrastructure and potential to double its export volume and generate 2 million new job opportunities.
In a statement here on Thursday, PTEA Chairman Sohail Pasha said despite extreme crisis, textile industry remained the most export-oriented sector of the economy in last decade with its 60% share in the country’s export revenues; however stagnating textiles exports have been a consistent source of concern for the economy.
Challenges like stuck up liquidity, high priced energy inputs and imposition of duties & taxes on inputs / raw materials are adversely impacting production, employment and exports, he added.
Terming liquidity crunch as the core issue, he said that extreme cash flow crunch has squeezed the financial streams as major portion of exporters’ working capital around PKR 170 billion has been stuck in refund regime on account of Sales Tax, Income Tax, Custom Duty Drawback & Textile Policy Incentives.
Although reduced energy prices significantly helped enhanced the competitive edge in international market but lack of finance shattered all the efforts to achieve sizeable growth in textile exports, he lamented.
In order to settle the long outstanding issue of stuck up liquidity, Government introduced certain amendment (67A) in Sales Tax Act 1990 through Finance Supplementary Bill to allowed liquidation of outstanding Sales Tax Refunds through Promissory Bonds and exporters opted the option to support the Government in tight monetary situation as economic indicators were not favorable and the country was in heavy debts.
First tranche of promissory bonds amounting to Rs. 7 billion was issued in June 2019 to 90 claimants which has now been reached to Rs. 17 billion out of which Rs. 9 billion relates to manufacturer exporters of five zero rated sectors.
Unfortunately, after laps of 4 months, no discounting mechanism has yet been devised for encashment of bonds and exporters are still under severe financial stress, he lamented.
On the other hand exporters who did not opted the option of bonds have received 100% cash payment against their in hand RPOs of sales tax.
This has created immense disappointment among textile exporters who support the Government in really good faith. Furthermore, if the bonds are discounted under current circumstances, exporters will receive 15% to 17% less value due to KIBOR @13.6% and 1.5% to 2% bank spread.
He demanded immediate settlement of the issue of discounting of promissory bonds as liquidity crisis will result in massive de-industrialization, significant fall in exports and extremely unmanageable level of unemployment.
Vice Chairman PTEA Haris Yousaf urged to address the challenges in export growth as global markets are wide open and Pakistan can achieve significant increase in exports by encouraging investment in addition to enhancing competitiveness.
It is the right time to facilitate the export sectors as we direly need to stabilize the economy because only export sector has the ability to put country’s economy on track and steer Pakistan towards economic prosperity.
Highlighting an important issue, he said that refunds against Provincial Sales Tax are pending since 2013 creating extreme financial stress and exporters are unable to accelerate industrial growth and make significant increase in exports.
He demanded immediate payment of all outstanding refunds to robust the industrialization, increase exports and generate new job opportunities.— PRESS RELEASE