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Textile units shut down amid rising costs

Updated July 04, 2019

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LCCI seeks delay in CNIC-based invoicing by at least one year. — AFP/file
LCCI seeks delay in CNIC-based invoicing by at least one year. — AFP/file

KARACHI: The business of wholesalers and retailers associated with textile processing mills has come to a standstill after the end of zero rated regime for the textile sector coupled with imposition of sales tax of 17 and 20 per cent, said the All Pakistan Textile Processing Mills Association (APTPMA).

APTPMA Chairman Mohammad Arif Lakhani in an emergency meeting held on Wednesday said that, “we are not on strike but all processing industries have been closed for the last three days as our customers have stopped sending any work of dyeing and printing at our factories, rendering thousands of workers jobless.”

The meeting was attended by association’s members including wholesalers, retailers, representatives of hosiery and textile sectors.

The meeting unanimously passed a resolution demanding an extension for sales tax implementation on CNIC basis besides continuing SRO1125 and zero rating till July 31, according to a press release issued by the APTPMA. The association also asked the government to find a solution for sales tax issue by July 31 after holding negotiations with dyeing and weaving sectors along with textile retailers and wholesalers.

LCCI seeks delay in CNIC-based invoicing by at least one year

APTPMA former president Zubair Motiwala said that imposition of 17pc and 20pc sales tax, 31pc increase in gas tariff, power tariff hike and rupee depreciation against the dollar have increased the cost of doing business.

“Our exports will fall by 30pc in case sales tax exists on zero rating sectors,” he feared adding that imposition of sales tax would not augur well for export-oriented industries.

Pakistan Hosiery Manufacturers and Exporters Association Chairman Jawed Bilwani said the textile sector has been passing through an uncertain phase and Prime Minister Imran Khan should take serious notice of the concerns raised by businessmen as the closure of industries would plunge the country into economic crisis.

He expressed surprise that the PM has been meeting with representatives of irrelevant and un-registered associations.

“PM should hold meeting with registered trade and business bodies and restore zero rating for industries,” he added.

Representative of clothes market, Alam Sheikh said prices would go up due to imposition of sales tax on dying, printing, yarn, clothes, embroidery, retailers and wholesalers.

“We will go for the strike if the government fails to take notice of our demands in the next 72 hours,” he warned.

Wholesaler Shahid Wadood said the imposition of sales tax would make a big difference in production cost and encourage smuggling of clothes from India and China into the Pakistani market.

“Wholesalers are facing severe problem in cash recovery from retailers after budgetary measures,” he added.

Warning issued

The Lahore Chamber of Commerce and Industry (LCCI) has warned the government that trading activities will come to a halt if the condition of disclosing CNIC details of sales to unregistered persons is not delayed for at least one year.

“We request the government to relax the condition of disclosing CNIC for sale to unregistered persons for one year. And if the government continues to ignore this issue, trading activities will surely come to a halt,” LCCI President Almas Hyder said while speaking to a gathering of businessmen on Wednesday.

Under an amendment introduced by the government in the Sales Tax Act, sellers are required to include the buyer’s CNIC number on the sales tax invoices.

However, the business community believes that this condition would result in a potential misuse of CNICs and can be used in fraudulent transactions of billions of rupees as reported from time to time.

Similarly, in such situation, buyers will also prefer purchases from unregistered sellers. “There is no logic to bind traders to charge sales tax at retail end,” he added.

On the other hand, the Markazi Tanzeem Tajran Pakistan on Wednesday announced to hold countrywide protests, observe shutter down strikes and take extreme steps if government didn’t accept their charter of demands till July 7.

“We have given a deadline of July 7 to the government to accept our 32 demands. And if it ignores these, we will have no option but to put keys of thousands of industrial units, business premises at Islamabad D-Chowk besides initiating a protest move and observing shutter down strike,” said MTTP President Kashif Chaudhry at a press conference at Lahore Press Club.

Published in Dawn, July 4th, 2019