LAHORE, June 21: The All-Pakistan Textile Mills Association, Punjab, Chairman Akbar Sheikh, has called upon the State Bank of Pakistan governor and the Federal Board of Revenue chairman to attend to anomalies resulting from the federal budget and SBP austerity measures announced in May.

In a statement issued here on Saturday, he said that while the industry saw a change in the government focus to commodity producing sectors it also experienced lack of management at micro level that was threatening the outcome of change in policies.

The mismanagement gave the misimpression that economy still lacked sense of ownership and urgency at the highest levels.

Pointing out the specifics, he said that SBP requirement of 35 per cent advance margin for opening of LCs had still not been removed for polyester staple and other manmade fibres which compromised the raw material for textile and engaged almost 50 per cent spindles of spinning industry.

He said this delay by the State Bank had denied an opportunity for mills to book long-term export orders and cover their raw material position in the international markets. In spite of numerous approaches, the SBP, the regulatory body, had not even acknowledged the existence of the problem.

He said that the requirement of two per cent advance income tax on import of inputs for the textile sector, specially the spinning mills, was unduly distressing. The condition would hurt the liquidity of the important export sector and involve it in a never-ending refund cycle.

The FBR, he said, must not subject this sector to advance income tax requirement. Similarly imposition of 10 per cent advance income tax on electricity bills which appeared intended for non-assessee sector was also an unwanted burden the organised corporate sector.

The FBR should issue a notification to exempt all the units which had been extended zero- rating of the GST from provisions of advance incomes tax on import as well as on utility bills.

He said that the Aptma was also concerned about the requirement for sole proprietorship and Association of Persons (AoPs) to act as withholding agents, while Aptma understands the motive behind the rule. It was concerned about changes in relevant section which would make it difficult for members to get the required exemption certificate.

The FBR should consider the current state of affairs of the textile mills sector and allow issuance of exemption certificates for whole financial year 2008-09, based on last assessment.

The federal finance minister should give immediate attention to the issues which are basically revenue neutral, but had major effect on the performance of the industry and exports.