PRGMEA demands zero-rating regime as buyers hold payment for indefinite time

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LAHORE: The value-added textile industry has asked the government to immediately restore zero-rating regime for the five exporting sectors, which are facing severe liquidity crunch owing to non-payment by the international buyers for indefinite period amid worldwide lockdown due to the coronavirus pandemic.

In a joint statement here on Wednesday, Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) regional chairman Sohail A Sheikh and chief coordinator Ijaz A Khokhar appealed to PM Imran Khan to announce the previous system of ‘No Payment No Refund’ at least for one year to save the export industry, as they said FBR claim of instant refunds release has totally failed, especially in the challenging time of global epidemic when the foreign buyers have also held the payments for indefinite time.

“It is feared that thousands of SMEs might close down in next few months with drastic downfall in the country’s exports and foreign exchange earnings, resulting in un-employment of hundreds of thousands of workers, as only textile sector earns 60 per cent of total exports in Pakistan,” Ijaz Khokhar said.

He said the already businesses are limited, as most of the orders have been canceled or put on hold. As a result, majority of industrial units are running at minimum capacity of 25pc, but still they continue to retain the workers on jobs without any work and with full wages.

“This is really a huge burden on the industry and very difficult circumstances to survive to retain the whole labour for a long period. To keep the industry live major problem is cash flow and the zero-rating facility is the only way for survival,” the PRGMEA chief coordinator added.

Proposing other option, he said that the Pakistan export industry could also survive through switching over to the production of protective equipment, capturing the ever-increasing post-cornonavirus global market share.

Khokhar added the government should adopt aggressive approach to open export of this equipment in both non-woven and woven fabrics to support the exporting sector in present scenario of worldwide epidemic.

PRGMEA regional chairman Sohail A Sheikh observed that the restoration of zero-rating would help revive exports and earn the much-needed foreign exchange, keeping in view the projected contraction in the national economy, which is expected to shrink for the first time in last 65 years due to Covid-19.

He demanded of the government to allow duty-free import of raw material enabling the exporters to play their role in capturing the market share of PPE so that millions of jobs in export sectors could be retained.

Sheikh said the withdrawal of zero-rated status has turned to be a detrimental for the exports of the country, especially destroying the industrial sector of Sialkot.

He said that the textile industry has the status of Pakistan’s top national industry, providing jobs to millions of workers directly or indirectly and generating revenue of billions.

Sheikh said the withdrawal of zero rated status has created multiple problems like unemployment, shifting of capital and reducing the exports of the country to the lowest ebb. Keeping in view of the gravity of the issue, PM should take remedial measures for protecting the export sector by abolishing SRO-1125, he added.

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