Govt urged to announce ‘five-year export policy’ to end uncertainty

LAHORE: The All Pakistan Textile Mills Association (APTMA) has urged the government to immediately announce the ‘five-year export policy’ in order to end uncertainty among exporters.

Commenting on the federal budget 2020-21, APTMA-Punjab Chairman Adil Bashir Bashir said, “If it was difficult for the government to extend the zero-rating facility to the export-oriented industry, it should have at least reduced sales tax to five per cent in order to resolve the liquidity issues faced by the exporters on account of stuck-up refunds.”

Reduction in sales tax would have also brought the untaxed sector into the tax net, he added.  

Bashir stated that the textile industry was demanding a reduction in the turnover tax by half so that the industry could compete with regional competitors. 

He recalled that APTMA had also asked the government to continue with the energy package for the export industry by ensuring the provision of electricity at 7.5 cents per kWh and RLNG at $6.5 per MMBTU in FY21. But despite committing that the facility would be extended in the next fiscal year, no clarity so far has been given in this regard by the government, he added. 

“In the 18-month period when competitive energy prices were implemented, Pakistan’s textile exports increased in real (US Dollar) terms, even though prices per unit values of exports were lower,” The senior APTMA official noted. “So despite the fact that the external environment was not favourable, textile exporters were able to compete in international markets and achieved increased exports which would otherwise have fallen by over $3 billion per year, necessitating more borrowing, he stated. 

Bashir informed that a number of major retail chains in the US and EU were filing for bankruptcy due to corona-related economic slowdown, while the remaining were either being forced to offer massive discounts or were delaying/cancelling their shipment orders. 

“By all accounts, the demand for textile has crashed in the global market and it is unlikely to attain the previous levels in the foreseeable future. Competition among the remaining markets, where price levels will be substantially low, is likely to be intense,” he remarked.

Under the prevalent circumstances, he reiterated, the government must resolve its ‘balance of payments’ issues by providing regionally competitive energy to the export sector.

“Pakistan has been managing its ‘balance of payments’ crisis through local and international borrowing for quite some time. More debt piling or borrowing is not a feasible solution and therefore, an increase in the volume of exports in the only way forward.”

Bashir hoped that the government would announce the export policy without any delay so as to attract fresh investment in the export-oriented sector, create job opportunities and put an end to the uncertainty regarding government policies.