The budget can prove to be a game changer for the economy of Pakistan if it encourages exports, industry and employment, he added. "The country has a potential of annual GDP growth of 8 percent but if the above issues would not be addressed in the upcoming budget and incentives would not be provided for fresh investment than our dream of economic growth might turn into a nightmare and then even the CPEC would not help us to survive in the international market and we will become only a trading based country", he said.
He said that the government must avoid imposing additional taxes on the industry and removal of incentives which if done would prove to be the last nail in the coffin of the ailing manufacturing and export sectors of the country. This is going to be the last opportunity to reverse the downfall of industry, exports and balance of payment, he added.
He mentioned that during the first 10 months of the current financial year, the trade deficit has already jumped to $ 26.555 billion from $ 18.951 billion of the corresponding period of the last Financial Year ie an increase of 40.12 percent and if this trend continues, trade deficit for the current financial year will reach to a record level of $ 30 billion. Textile exports for the same period have been reduced to $ 10.296 billion ie about 1 percent lesser than the corresponding period of the last year. As against this the Textile Industry is running below capacity although it has a potential to increase the exports of the country to $ 30 billion.
Senior Vice Chairman APTMA lamented that the textile sector is battling hard for their survival in the global market, with problems such as severe competition from neighbours, high cost of doing business, high cost and shortage of raw materials. "Marred with highest utility tariff both gas and electricity in the region, highest corporate tax in the region, turn over tax at the rate of 1 percent, the extended delay in arranging timely refunds of sales tax have worsened the prospects of the industry, hence the liquidity crunch will further lead to disastrous consequences", he said.
He further said that the hard hit textile is earning about 60 percent of the foreign exchange through exports and providing more than 38 percent employment in the manufacturing sector. He demanded the government to provide system gas at regionally competitive rate of Rs 400/MMBTU across the country and remove the levy of GIDC. The rate of RLNG should also be reduced. He pointed out that the ECC had earlier announced rate of Rs 400/MMBTU but it was not implemented. He said that the electricity rate for independent feeders should be Rs 7 kwh without levy of surcharges.
Zahid Mazhar has demanded the government to ensure availability of raw materials to the industry by allowing duty/tax free import of cotton and polyester staple fibre as the country has already suffered huge losses due to failure of cotton crop for the last two consecutive years. "It is therefore imperative to continue with the policy of import of cotton without duty and sales tax rather it will be suicidal to re-impose custom duty and sales tax on import of cotton", he said.
He requested the government to ensure Zero Rating of all inputs in true spirit including packaging materials, spare parts and fuel and energy. Payment of all pending refunds of sales tax, which is more than Rs 200 billion resulting in creation of severe liquidity problem to the industry, duty drawbacks and incentive schemes claim should also be made without any delay.
He demanded proper allocation of funds against the Prime Minister's Export Led Growth Package announced in the January this year which envisaged payments of Rs 10 billion per month, whereas only Rs 2 billion has been released so far during the last four months, he added. He urged the government to advise the Commercial Banks to provide Long Term Loans and Working Capital to the textile industry at competitive rate, besides reducing the Turnover Tax to 0.25 percent from existing 1 percent.
Zahid said that the Textile Industry of Pakistan which is contributing 60 percent to Pakistan's Exports is capable enough to control the trade deficit, increase employment and achieve export target of 10 percent of the GDP provided the decisions and policies are made to support it instead of discouraging it.
Copyright Business Recorder, 2017