The Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) has warned that in the face of continued delay in sales tax refunds and unofficial restrictions on import of raw material the garment industry would stop running gradually, leading to inordinate delay in export orders and damaging the reputation of Pakistan, as several units have already slashed their production because they are in a difficult situation in the face of growing currency crisis.

PRGMEA Central Chairman Mubashar Naseer Butt and Vice-Chairman Wasim Akhtar Khan, in a joint statement, said though the central bank had officially removed restrictions on import of raw material under customs tariff chapters 84and 85, practically the constraints still continued to haunt the garment industry, leading to severe shortage of industry raw material in the country, as the authorities had not been fulfilling their commitments in spite of several reminders and meetings.

“We are facing severe liquidity crunch due to undue delays in release of our own money in the form of stuck-up refunds, besides the barriers created by the SBP in connivance with the commercial banks to open letter of credits (LCs) to proceed with export shipments,” said the PRGMEA chairman.

Mubashar Butt observed that the value-added textile industry was facing hurdles to get the meager amount of just $10,000 against the export of $100,000, which is unfortunate for the country, as commercial banks were refusing to provide dollars to the exporters on the plea of shortage of greenback and the SBP was unable to take any action against them.

Moreover, he said consignments of industry raw material remained stuck at the port despite the government had lifted the ban on imports. The PRGMEA chairman observed that the business community was expecting that the imports restrictions would be relaxed as soon as the country received installment of the IMF loan, but it was unfortunate that the situation had not changed so far, mainly due to mismanagement of the authorities.

Mubashar Butt also expressed his distress over the performance of the FBR’s refunds system, as sales tax refund claims were mounting due to irresponsible approach of the authorities concerned, who are unable to explain the reason for this delay. He urged the government to immediately release refunds claims of the textile industry, as it had committed that the exporters’ refunds payment orders would be issued in 24 hours while refunds would be cleared within 72 hours of the issuance of the RPOs, but practically this commitment was not being met, as the 72 hours were being extended to several months.

He said the government needed to take immediate measures to arrest the slowdown in textile exports, as these policies would bring Pakistan’s most valuable sector on the verge of collapse. PRGMEA Vice-Chairman Wasim Akhtar demanded the continuation of the previous transparent, speedy and trustworthy culture of sales tax refunds of the exporters. He said that exporters were unable to procure and purchase raw materials and other accessories to fulfill their future export orders and this will ultimately collapse the entire export trade.

He pointed out that the government had created a culture of trust among the business community by paying refunds timely and regularly, which was appreciable, but the situation had now changed. “The industry is presently facing gaps and the authorities are not ready to give us the reason for the delay, creating a trust deficit and sending a wrong message to the exporters of the value-added textile industry, which is the backbone of the economy,” he said.

Credit : Independent News Pakistan-WealthPk