They said that the withdrawal of zero rating facility of key five sector ie value added textile, leather, carpet, surgical instruments and sports goods will further decline the exports of Pakistan which is already confronted with many challenges.
These five sectors contribute 70 percent in exports of Pakistan and contribute significantly in earning foreign exchange and providing employment to skilled and unskilled labour force.
They further stated that the refunds claims of exporters amounting to Rs300 billion is already pending with FBR creating liquidity crunch and hurdles to new investment.
Due to uncertainty in economic environment, the investors are reluctant to make investment in Pakistan. Moreover, more than 30 percent devaluation of Pakistani rupee in last one year does not impact positively on the enhancement of exports.
They added that the withdrawal of this facility will increase cost of doing business due to 17 percent sales tax and high utility cost, as Pakistan's exports is already facing a tough competition in international market due to enormous facilities given by the regional countries to their exporters.
They further stated that government should find new avenues for enhancement of its revenue instead of damaging the exports sector which is already on a decline. They suggested that the government should facilitate the industrialisation in Pakistan particularly the agro-based and value added industries for the enhancement of exports.
President of Korangi Association of Trade & Industry (KATI) Danish Khan, Senior Vice President Faraz-ur-Rehman and Vice President Maheen Salman urged continuation of zero rating facility for industry in a joint statement released by the association.
President KATI Danish Khan said that if the facility were revoked, it would cause devastating effects on Industry. He said that zero rating facility to five major industries was given to support country's exports and now when devalued rupee and increased interest rate have already made unfavourable conditions for industry if this facility is not continued, how will we increase the exports. He said that initial effect of any such step will bring down exports by at least 2 or 3 billion USD.
Exporters and industries are already facing liquidity issues just because of our delayed refunds of hundreds of billions and federal finance ministry hasn't resolved this issue for almost a decade, now FBR is asking to discontinue this facility just to make their balance sheet correct. "Pakistani industry cannot bear the cost of this," he added. Khan said that any such action will not be accepted and the industrial community of the country would oppose this decision. He further said that government should consider the fact that any step which increases the cost of production in industry directly affects the export volume and can we afford decline in our exports at this stage? This is the question government should answer.