KARACHI, June 9: Business leaders have urged the government to allocate special funds for the infrastructure development in the new trade policy as the textile industry is expected to register a robust growth of 25 to 30 per cent owing to incentives and duty exemptions proposed in the budget 2005-06.

Speaking at a press conference, Aslam Karsaz, Sultan Ahmed, Zubair Motiwala and Dr Shafi Mohammad while appreciating the new budgetary proposals apprehended that if appropriate measures were not taken for the improvement of dilapidated infrastructure the expected growth would slow down.

The business leaders stressed the need to immediately allocate special funds for enhancing power generation capacity, developing affluent treatment plants and ensuring availability of water to the textile processing industry so that a sustainable growth could be achieved and exportable surplus could also be created.

Zubair Motiwala said that captive power plants should be given gas connections so that cheap power supply could be ensured without any interruption, which was necessary for quality and timely delivery of export goods. He suggested that the fund for this purpose could be created on Islamic mode of financing such as Modaraba or Musharakah, or even dollar fund. He said the time had come when the government should fully concentrate on this issue which could become the cause of failure of pragmatic and growth-oriented measures taken in the new budget.

He said that there was an urgent need for setting up affluent treatment plants in the industrial areas because it is one of the basic conditions laid down by foreign buyers to meet the environmental requirement. Above all, he pointed out that such plants could also recycle water for industrial needs after necessary treatment and could help meet the water crisis.

Mr Motiwala, who heads a committee set up by the CBR chairman on tariff rationalization on textile synthetic chain, said that as a result of the working of this committee the government would now be able to provide 15 per cent as compensation to fibre producers using locally-produced and imported PTA as raw material. He said this would help garment exporters get a better mix of cotton and polyester and successfully compete in the world market.

He anticipated that exports of knitwear could surge by 33 per cent from $1.3 billion to $1.8 billion in a year time, adding that all-out efforts should be made to ensure the availability of yarn to this industry.

He suggested that in order to ensure cheap and abundant supply of yarn to the local industry, the government should withdraw tax concessions to yarn exporters allowed under clause 143B of the Income Tax Ordinance and added that the same concession should be given on local sale.

Despite the fact that the ECC in a meeting allowed the textile industry to convert their captive power plants to gas, but gas companies had refused to give concessions, he asserted.

Pakistan Hosiery Manufacturers Association Chairman Aslam Karsaz said that the exemption of exports of major five industries from sales tax and allowing them zero-rate regime would not only reduce the cost of production, but will also spare the exporters from the hassle of refund.

However, he urged the CBR to sort out pending cases of sales tax refund at the earliest so that required funds could be used by the industry and exporters for their growth and export commitments. He said that even after severing show-cause notices and hearing of cases, the decisions were not being implemented.

Mr Karsaz suggested that a final date should be fixed by the CBR for such cases as this would provide a great relief to the exporters who had to face tough competition from other countries of the region in the world market.

He was critical of the government policy for using the Export Development Fund on projects other than export and demanded that these funds should be used for developing infrastructure of industrial estates all over the country.

He said that affluent plants and other such mega projects should be handled on community basis and the government should set up companies under private-public partnership to establish these projects and charge the industry for providing services. The permission to individual industry to have its own set-up would not be only costly, but it would also require a huge piece of land to set up such plants.

Mr Karsaz said the government should abolish institutions like EOBI, SESSI and other such provincial and federal agencies numbering up to 48 and instead should provide a one-window service to collect fixed amount from the industry.

PHMA vice-chairman Sultan Ahmed said that the average cost of such agencies came to around seven to eight per cent to an industry and the government should either abolish such taxes or provide a one-window facility to collect a fixed amount per annum.