Pakistan Hosiery Manufacturers Association (PHMA) has called for a level-playing field with regional competitors through continuation of existing concessionary energy tariff for the export industry, terming the government’s proposed decisions to discontinue the tariff concession unwise and disastrous for exporters. According to a press statement received by WealthPK, the PHMA Zonal Chairman Naseer Butt said the move of increasing energy tariffs was unwise, and would spoil the hard efforts of exporters to enhance Pakistan’s exports in previous years.

He urged the government to ensure competitive energy tariffs and continue the Duty Drawback of Local Taxes and Levies (DLTL) scheme, as committed in the new five-year textile and apparel policy. He stressed that energy rates for industries should be brought at par or below the tariff prevailing in the competing regional countries. The PHMA zonal chief pointed out that electricity rates of Rs19.99 per unit and re-gasified liquefied natural gas (RLNG) at $9 per mmbtu should continue to enable the textile industry to compete effectively against regional countries. He said utility rates of industrial sector should be reviewed on an annual basis, and if rates in the regional countries fall, the tariff for domestic utilities should also be brought at par with it.

“If RLNG rates are reduced internationally from the existing level, this benefit should be passed on to manufacturers and exporters in the textile value chain,” he added. Butt said the Duty Drawback of Taxes (DDT) and DLTL schemes were introduced by the government over exporters' demand to redeem their local taxes paid on export consignments because earlier there were no taxes and levies on exports. “Therefore, reimbursement of DDT and DLTL to exporters is not an incentive from the government, and rather it is the amount paid back to traders against taxes,” he explained.

Butt said exports contribute directly to GDP (gross domestic product) growth, generate employment, and provide the only sustainable long-term solution. He said Pakistan’s exports have seen an upward trend especially during FY20 to FY22 where textile exports grew by a phenomenal 55% in just two years.

“Focusing on export growth necessarily involves promoting textiles as this sector contributes 62% of all exports,” he mentioned. Butt said the $19.3 billion industry, which relies heavily on exports, is experiencing a decline in global shipments. He said this situation is causing concern among its loyal international customers, who are becoming increasingly sceptical about the industry’s ability to meet deadlines.

The PHMA zonal chief pointed out that the situation is further compounded by the shortage of dollars and basic raw materials. “Unless the measures are taken to address these challenges, the textile sector in Pakistan may continue to face a downward spiral. Expanding our exports, especially in the textile sector, and removing all hurdles in this regard should be of utmost importance,” he said. He cautioned the government that any decision to discontinue the concessional power tariff for five export-oriented sectors will be disastrous for the country’s economy.

Credit: Independent News Pakistan-WealthPk