Withdrawal of zero-rating regime

ISLAMABAD: Adviser to Prime Minister on Finance, Revue and Economic Affairs, Dr Hafeez Shaikh, is dashing to Lahore on Saturday (tomorrow) wherein he will hold talks with business stakeholders particularly the representatives of textile sector, Punjab in Governor’s House and reiterate the withdrawal of the energy package (RLNG at $6.5 per MMBTU, and electricity at 7.5 cents per unit) that Imran government earlier extended to export industry.

The sources in the Finance Ministry claim that Dr Shaikh will let the business community in Governor House that under the IMF commitment it is not possible for his government to continue the energy package to textile, leather, sports, carpet and surgical sectors, however, the adviser may face the music from the business community. ‘Dr Shaikh is most likely to get tough time from the textile sector whose existence is in danger zone with decision of new economic team of PTI government.’ Pulling out of zero rating first and then withdrawal of energy package will put the textile industry in tatters as this step will make the textile products in the world noncompetitive as the regional economies are providing their respective textile sectors the electricity at 7.5 cents per unit and the gas at $6.5 per MMBTU. In case of withdrawal of energy package, the textile industry in Punjab will have to pay Rs1,800 per MMBTU for gas which is being supplied to industry in Sindh at Rs600 per MMBTU. Under this scenario Punjab textile industry will die down as this will certainly trigger, the official said, to massive decrease in exports which may touch this year $24 billion. The PTI government which was earlier craving for US dollars had carved out the plan under which export industry was provided the RLNG at $6.5 per MMBTU and electricity at 7.5 cents per unit on par with the provision of the two inputs of regional economies of India, Bangladesh and Vietnam to ensure the products of Pakistan competitive in the international market but withdrawal of the energy package from the export industry and doing away with the zero-rated sector will make the export industry non-competitive in the global market and the hopes of increasing the exports and fetching the US dollar in the country have now erased.

Mr Shahid Sattar, Adviser to Aptma (All Pakistan Textile Mills Association) while talking to The News said that withdrawal of zero rating SRO and then taking back the energy package is a move against Pakistan as it will inflict the huge damage to Imran Khan’s initiative to earn the US dollars through the increase in exports, but under the said decision Punjab Industry will be in jeopardy and the 2 million jobs will be at risk as the textile units will get closed down. ‘So much so the investment of US $ 5 Billion currently in the pipeline would vanish.’

‘The current upward trend of production would get lost and that exports would decrease by more than $3 billion in the coming 9 months should the government persists on withdrawing of Zero Rated regime and taking back of energy package'.