Under-allocation sends textile sector spinning into anger

LAHORE: The textile sector was sent spinning into anger and frustration after federal budget 2017/18 document revealed that out of Prime Minister’s Rs180 billion export incentive package, only Rs4 billion has been apportioned for clearing refunds during this fiscal, a statement said on Wednesday. 

“The budget has deeply disappointed the textile sector,” Amir Fayyaz, chairman All Pakistan Textile Mills Association (APTMA) told media during a press conference. “Such an under-allocation of funds for export package has created uncertainty among the exporters.” 

Warning that exports would suffer big time if the government failed to fulfill the commitments given to the exporters, Fayyaz pointed out that other measures, taken in the budget, have only increased the cost of doing business for this sector. 

“The textile exporters were waiting for the budget before confirming large orders as they had planned to keep their rates lowest to secure larger orders and earn to the extent of discount promised by the government, but to no avail,” he said. 

The APTMA chief said that such a low budgetary allocation for refunds would only result in even lower volume of orders. “On one hand, the government promised 4-7 percent refund on exports, but on the other, it increased the turnover tax from 1 percent to 1.25 percent,” Fayyaz said. 

He said textile mills incurring losses for the last 3 years have filed cases for refund of turnover tax, but the government, as usual, is sidestepping. “I appeal to the government to not only withdraw this increase but also reduce the rate to 0.5 percent of annual turnover,” said he. 

Taking Federal Board of Revenue (FBR) to task, the textile industry leader said that the board was unjustified in suspending the approved refunds of the exporters. “The finance minister has promised the refunds will be cleared by August 14, but I don’t see it happening now,” he said. 

While regretting that the government has not passed on the benefit of lower fuel prices to power users, Fayyaz sounded out that high power tariff was marginalising the manufacturing sector alarmingly.