‘Exports cannot increase without support for value-added textile sector’

KARACHI: Muhammad Jawed Bilwani, Chairman, Pakistan Apparel Forum and Chief Coordinator, Value Added Textile Forum, quoting official figures of Pakistan Bureau of Statistics (PBS) in his statement on Tuesday that overall exports declined by -13.42 percent during July-October, 2015.
Comparing it with major competitors, he added that during the current fiscal, overall exports of Bangladesh increased by 4.95 percent, Vietnam increased by 9.20 percent, and overall exports of China and Sri Lanka decreased negligibly -2.50 percent and -4.50 percent respectively.
“These figures once again clearly prove that the government is consulting only with those whose agenda is to decrease exports on account of their personal gains and the government is on the wrong track,” he said. In the last fiscal year 2014-15, overall exports also declined by approximately 5 percent.
He asserted that the major reason of persistent decline in exports is high cost of inputs – tariff of gas, electricity, water, raw material etc in comparison to our neighbouring and other competing countries. Other reasons include blockade of huge amounts of liquidity of the exporters against Sales Tax Refund Claims; DLTL Claims, and Customs Rebate claims.
He said that at the end of the Pakistan Peoples Party (PPP) tenure, it imposed two percent sales tax on Exports vide SRO 154(I)/2013 dated February 28, 2013 which was then strongly opposed by the Pakistan Muslim League-Nawaz (PML-N).
It is sheer injustice that when PML-N took over the government, instead of withdrawing the two percent sales tax on exports, this incumbent government went ahead and increased the sales tax on exports by 50 percent in the last Budget 2015-16. Ironically, now the PPP is opposing this harsh measure by the government.
“When the sales tax rate was two percent the government was unable to refund the sales tax claims, how will they pay back the claims after increasing it by 50 percent?” he asked. All of this seriously impacts only the value added textile export sector and not the spinning sector.
Further, the amount of claims was low during the PPP’s government, whereas now it has inflated to a huge figure because of the increase in sales tax and also due to the blockade by the Federal Board of Revenue (FBR) to show higher tax collection.
He warned the government in the meeting on Budget Proposals with Federal Finance Minister Ishaq Dar and FBR chairman that vital exports will plunge approximately 20 percent further if the sales tax on the exports was not withdrawn. Now it was proved that the exports have declined by -13.42 percent in just four months of this fiscal year.
He asserted that the government wants to increase the cost of doing business of the export oriented industry which will eventually reduce vital exports drastically, saving electricity and gas for domestic consumers. “This is indeed a ridiculous policy and requires serious review by the government,” he said in the statement.
The government should understand that until and unless the value added textile sector is not supported and their grievances in terms of cost of doing business / manufacturing not evaluated in comparison with regional competing countries, our exports will never increase. He said that we have time and again even proposed the government to hire foreign consultants for assessing the difference in the cost of manufacturing in Pakistan vis-a-vis Bangladesh, India, Sri Lanka, Cambodia, Vietnam, and China. This would actually give a true and clear picture of why exports have nosedived.
He appealed to the prime minister and federal finance minister to invite the value added textile sector of Pakistan for deliberations to ascertain the causes of this depressing situation.
He reiterated that to render this sector’s competitive in the global market, it was imperative that (1)cost of all essential utilities be brought down at the level of our neighbouring and other competing countries; (2) Top priority be given to the export oriented industries in the supply of all utilities 24/7 365 days to run the industries without the least interruption; (3) Zero Rating of Export Oriented Textile Sector – No Payment No Refund Scheme as when Sales Tax has to be refunded then why collect Sales Tax; (4) immediate Refunds of long outstanding amounts of Sales Tax, DLTL and Customs Rebates Claims.