Pakistan’s textile sector, encouraged by the new government’s reforms to gas pricing, is now seeking exemptions from duties and taxes on imports of raw materials – and requesting the long-awaited release of refunds by the Federal Board of Revenue (FBR).
The Pakistan Readymade Garment Manufacturers and Exporters Association (PRGMEA) met with Razzak Dawood, an advisor to Prime Minister Imran Khan on commerce and textiles, on 24 December.
There, PRGMEA central chairman Mubashar Naseer Butt demanded: rationalisation of duty structures and taxes on imports of raw materials for the value-added textile sector; simplification of the Duty and Tax Remission for Export (DTRE) regime; and measures both to discourage export of raw materials and to encourage shipment of value-added goods. He urged the advisor to give unconditional 100% drawbacks on value-added exports in addition to the clearance of refunds held by the FBR.
This follows the changes to Pakistan’s gas pricing, which came into effect last October, when the government reduced the tariff to US$6.50 per MMBTU (1 million British Thermal Units – an internationally accepted gas measurement) from US$12.50 per MMBTU for five exporting sectors: textiles, leather, surgical, sporting goods and surgical items.
Dawood assured Butt that the government was taking all possible steps to improve the industry, including changing tax and duty arrangements.
Anis ul Haq, secretary general of the APTMA, tells WTiN.com that his industry’s demands for such reforms are fair and the newly elected government of Prime Minister Imran Khan must take them into serious consideration for the sake of competitiveness and viability of the industry. However, he points out that this cannot be done until and unless the government develops a comprehensive textile policy and implements it in both letter and spirit – failure to deliver earlier such policies is a key concern of the industry. The new government should especially focus on reviving elements of the textile industry that have been forced to close because of recent cost increases and trade difficulties, he adds.
Former APTMA chairman Gohar Ejaz stresses that the revival of the Pakistan textile industry needs immediate attention. "During the last five years, as many as 150 textile mills have closed operations due to loss of viability," he claims.
If the government wants an increase in exports, it will have to resolve the issues of the textile sector on ‘war-footing grounds’, he states.
Recently, the APTMA leadership hosted a lunch reception for Prime Minister Khan to apprise him of their problems. Addressing the function, Khan said: "I am well aware of the problems being faced by the textile sector and want to see the industry develop and prosper."
He added that despite the many economic challenges currently facing his government, enabling the textile industry was a priority – although he did not reveal specific plans.
According to Haq, Pakistan's yarn exports have been falling because the government is restricting the export of surplus raw materials. He suggests that, if the government wants to discourage raw material exports, it should first increase the capacity of the downstream textile sector processing such inputs, working to attract more investment to the sector.
Endorsing the PRGMEA chairman's pleas to allow 100% duty drawbacks without having to increase exports and for the government to ensure the early payment of tax refunds, Haq says such measures will increase the cost effectiveness of Pakistan textile industry.
