According to Mr Syed Ali Ahsan, Chairman APTMA, the withdrawal proposal of zero rating regime will have a negative impact on export production and investments. The policies would deter local as well as foreign investments in the textile sector and would increase the probability of industry closure.
He said the proposed scheme to raise revenue from the textile value chain by introducing 17pc sales tax and subsequent refund of the same under an already tested, tried and eventually failed system would choke down the entire value chain of the industry and exports due to the liquidity constraints.
The industry cannot afford to obtain funds at an exorbitant interest rate hovering around 15 to 17 pc and pay input tax and then wait for its refund. This system would have serious adverse implication on the entire textile value chain.
It has been estimated that raw materials as input of various sub-sectors of the textile value chain involves over Rs. 600 billion of the industry liquidity that would get stuck with the government and subsequently would become refund which is very difficult to obtain from the department. Sometimes, it can even take years to get the refund processed for the payment to claimant.
He stresses that the revenue from the local sales of the five export sectors can be increased by bringing the retailers in the tax net through normal regime or fixed tax regime as being contemplated for traders of Islamabad.
He said that due to govt. energy policies there has been an extraordinary increase in quantity exports (garments 29pc, knitwear 15pc, and bed-wear 10pc). The industry is on the verge of a takeoff with order books being full and expansion and Greenfield projects just awaiting announcement of the new five year textile policy to commence.
He advised the economic managers to introduce policies which are export friendly and strategic in nature.
