TOBA TEK SINGH: The “anti-export measures” in the federal budget 2024-25 will impact exports and the economy, stifling industrialization and leading to widespread joblessness. The budget makers have failed to provide necessary direction for industrial progress and export promotion.
This was said by Patron-in-Chief of Pakistan Textile Exporters Association Khurram Mukhtar at a press conference on Friday.
He said the textile sector, a vital segment of the economy, is facing a severe crisis. Industrial production is not utilising the built-up manufacturing capacity, resulting in lost foreign exchange earnings.
Despite expectations, the budget has neglected this critical sector and failed to address the major issues affecting the economy.
Mr Mukhtar spoke against the shift from the 1% final tax regime (FTR) to the minimum tax regime, saying that exporters already pay income tax on turnover, regardless of profit or loss.
The additional 0.25% EDF cost cannot be transferred to foreign buyers. This move contradicts the government’s principle of export-led growth, exponentially increasing costs for the export sector.
He said the textile sector has been facing a severe shortage of finances, with approximately Rs700 billion of exporters’ working capital stuck in the refund regime. This results in a 24% interest burden on outstanding refunds. Moreover, Rs38 billion in old refunds are pending, causing a liquidity crisis within the industry. Delays in sales tax and other refunds have pushed many firms to the brink of bankruptcy. The budget has further strained the industry’s liquidity without addressing the stuck refunds.
Mukhtar also criticized the elimination of zero rating on local supplies under the Export Facilitation Scheme (EFS), predicting a surge in intermediate input imports and a further hit on local manufacturers already struggling with high energy costs.
He demanded that the government reconsider the budgetary measures, restore the confidence of exporters, and reinstate the 1% FTR regime, zero rating on local supplies under EFS, and allocate funds for outstanding refunds to achieve economic growth.
Published in Dawn, June 15th, 2024
