KARACHI: Slow release of funds for the textile relief package announced in the textile policy has adversely affected export of textiles and clothing exports as many export houses are facing liquidity crunch.

Textile Industry Minister Rana Farooq Saeed announced a 5-year textile policy on Aug 12, 2009 but so far most of the incentives and relief measures contained in the policy could not be implemented.

Sources privy to the review meeting of the textile ministry held recently Islamabad told Dawn that out of total Rs40 billion textile package, the finance ministry has sanctioned Rs10 billion but only Rs5 billion have been released so far.

The participants to the meeting were of the firm opinion that the textile policy, which was appreciated by every segment of the textile sector, is far from implementation due to lack of funds and as a result the entire textile sector is suffering.

Sources said that most of the matters related to the textile ministry, which do not require funds, had been smoothly done but things came to standstill for those policy decisions where funds were needed.

After consultation with the stakeholders the ministry issued registration documents to the exporters for availing textile relief packages

The State Bank’s decision to increase export refinance by one per cent also came up for discussion and the minister assured the stakeholders that the difference in interest rate will be reimbursed to exporters.

The stakeholders were also assured that EOBI contribution by employers for lady workers will also be reimbursed and released along with interest rate difference.

The stakeholders strongly opposed payment of duty drawback to units located in export processing zones on the ground that these units do not pay local levies such as social security, EOBI and property tax, the sources said.

They also opposed the registration by exporters for claiming 60 per cent outstanding R&D support and said it would only delay funds badly needed for exports.

Similarly, representatives of export houses strongly opposed the idea to include commercial exporters in the new scheme for payment of duty drawback at two per cent for home textile and three per cent for garments.

They argued that the inclusion of commercial exporters in this scheme would open a flood gate of corruption.

The minister agreed to allow reimbursement of interest on long-term loans taken from Islamic banks and leasing companies.

There was resentment amongst the representatives on non-issuance of a circular by the State Bank on payment of duty drawback claims, which has deprived exporters of payments against their September shipments.

The textile minister agreed to do away with customs certificate for shipments made through L/Cs but maintained a restriction on those shipments, which are made through Document on Acceptance (DA) or Document against Presentation (DP).