The proposals indicate to key issues, which the textile sector is faced with, including higher rates of gas, power, water and labors' minimum wages from the tariffs that are in place in regional nations ie Bangladesh and India. The proposition also point out at a long-running issue of non-release of refunds by the FBR.
"Therefore we strongly demand that Zero Rating should be converted / transformed into an Act, as promised, to encourage the exporters and inculcate more confident in them for Balancing, Modernization and Replacement (BMR) and further industrialization and export enhancement," according to the letter.
It says that the high cost of inputs (power, gas and water) is restraining the textile export growth, proposing at least 20 percent down from that of the regional nations. Gas rates for textile sector should be reduced by 20 percent less than of those of Bangladesh ie $3.35, which is lowest in the region.
"The gas tariff per MMBTU in dollar terms in Bangladesh is $3.35; in India is $4.66 and in Vietnam is $6 and in Pakistan $7.59 (including Rs 200 GIDC) which is 126 percent higher than Bangladesh; 62.87 percent higher than India and 26.5 percent higher than Vietnam," it adds.
The PHMA recommends that rates of electric power for this sector should be scaled down by 20 percent per kilowatt / hour less than those of Vietnam ie $0.08, which is lowest in the region. "Electricity tariff per kwh in Bangladesh is $0.09; in India is $0.09 and in Vietnam is $0.08 and in Pakistan is $0.11 which is 22.2 percent higher than Bangladesh & India and 37.5 percent higher than Vietnam," the letter proposes.
Water tariffs in Karachi should also be revised by $.050, it says, demanding the key input utility rates should be uniformed all across Pakistan for textile sector. "Water in Bangladesh and Vietnam is free as get from well water while Water Tariff in Pakistan is varied. Water Tariff in all cities of Pakistan is $0.50, however, In Karachi is $2.30 per 1,000 gallons," it maintains.
The association says that reduction in inputs cost is a long-running demand of the country's value-added textile exporters to help make Pakistan's exports competitive on the world markets against the regional notations.
However, soaring cost of inputs hinders the country's apparel textile growth. "Minimum Wage in Pakistan is 111 percent higher than Bangladesh (Pakistan US $144 and Bangladesh US $68). Hence, 20 percent reduction will make Pakistani Exporters viable to compete with regional competitors," it points out.
Around 0.25 percent Export Development Surcharge is deducted from export proceeds of the exporters, it says, adding that the surcharge grows the cost of business for manufactures. "The Government already has around Rs 25 billion funds in its kitty for Export Development," it shows concerns.
With a proposition, it says that the government should place the EDF on luxury imported goods like cars, soaps, shampoos, cosmetics and finished items and should be abolished from exports.
The PHMA also asks the government to disburse all the withheld refunds of exporters without further delays. "Huge amount of exporters' liquidity is blocked with the FBR in their Sales Tax for years," it says.
On general sales tax refunds, it asks the government to settle the exporters' claims on GST at once through State Bank of Pakistan. "It is strongly recommended that all Sales Tax Refund Claims are settled and paid through State Bank of Pakistan at the time of realization and payment of Export Proceeds," it adds.
Apparel textile makers should be permitted to import yarn, fabric other key raw materials under the DTRE scheme, it says: "A four percent incentive should be given on indirect exports of yarn/local sale on domestic markets".
Copyright Business Recorder, 2017