Pakistan Hosiery Manufacturers & Exporters Association (PHMA) has sent recommendations to improve the competitiveness of textile value chain and proposals to enhance exports efficiency. PHMA Chief Coordinator, Muhammad Jawed Bilwani in his letter to Textile Division, Ministry of Commerce & Textile, Govt. of Pakistan has sent top five recommendations whereby he has accorded top priority to reduce high cost of inputs to be brought down – 20% lesser than the cost of inputs of regional countries and termed it crucial for the Government to provide conducive environment and level playing field by reducing cost of inputs – electricity, gas, water rates.
Bilwani highlighted that Gas tariff per MMBTU in dollar terms in Bangladesh is $3.35; in India is $4.66 and in Vietnam is $6 and in Pakistan $7.59 (including Rs.200 GIDC) which is 126% higher than Bangladesh; 62.87% higher than India and 26.5% higher than Vietnam. Commenting on Electricity Tariff he stated that Electricity tariff per kwh in Bangladesh is $0.09; in India is $0.09 and in Vietnam is $0.08 and in Pakistan is $0.11 which is 22.2% higher than Bangladesh & India and 37.5% higher than Vietnam. Therefore he demanded that Gas Tariff for Textile Sector should be reduced 20% less than of Tariff of Bangladesh i.e.$3.35 which is lowest in the region and similarly electricity tariff should be reduced 20% less than of Tariff of Vietnam i.e.$0.08 which is lowest in the region.
For water tariff, Bilwani urged to introduce uniform all across Pakistan i.e. $.050. Currently Water Tariff in all cities of Pakistan is $0.50, however, In Karachi is $2.30 per 1000 gallons which is discriminatory.
He emphasized that Reduction in inputs is the long awaited demand of the Value Added Textile Exporters to make competitive the Pakistani Exporters in the international market because Minimum Wage in Pakistan is 111% higher than Bangladesh (Pakistan US $144 and Bangladesh US $68). Hence, 20% reduction will make Pakistani Exporters viable to compete with regional competitors.
Secondly, Bilwani demanded the Government to honour the promise to transform Zero Rating from SRO System into an Act to encourage the exporters and inculcate more confident in them for Balancing, Modernization and Replacement (BMR) and further industrialization and export enhancement.
In his third recommendation, Bilwani demanded immediate disbursement of exporters’ refunds; proposal for release of future refunds and prompt payments of DDT under PM Export Package to give immediate sigh of relief and breathing space to the textile exports. Huge amount of exporters’ liquidity is blocked with the FBR in their Sales Tax for years together causing liquidity problems to the exporters in keeping up their export commitment.
He urged the Government to release Sales Tax Refund Claims, Custom Rebate Claims, Duty Drawback of Taxes (DDT) Claims are settled and paid through State Bank of Pakistan at the time of realization and payment of Export Proceeds. It was also requested that one time acceptance of all time barred claims of old DLTL, Incremental DLTL and DDT 2017 should be allowed.
In his fourth recommendation, Bilwani urged the Government to simplify DTRE Scheme and permission for import of yarn, fabric, accessories and other raw materials to the stitching units for manufacturing of garment meant for export under the DTRE Scheme be allowed to MINTEX License holders (Exporters) which license is renewed after every two years. All textile units should submit Application to MINTEX instead of Customs, FBR for permission all imports under DTRE. He further urged that 4% incentive on Yarn should be given to indirect exports (local sales to Pakistani Exporters) instead on direct exports to our competitors like China and Bangladesh who will get Pakistani yarn at 4% less cost than the Pakistani exporters. 4% incentive on sale of yarn to Pakistani Exporters (indirect exports) will provide aid to the local knitting, weaving and processing industries.
Bilwani in his fifth recommendation demanded that textile export sector should exclusively regulated under the federal government without any intervention from Provincial Governments and their Provincial Authorities and abolish collection of export development surcharge. 0.25% Export Development Surcharge is deducted from export proceeds of the exporters. This increases the cost of doing business of the exporters. The Government already has around Rs.25 billion funds in its kitty for Export Development. He proposed that EDF on exports should be abolished and a Trade Development Surcharge be levied on imported luxury items such as cars, soap, shampoo, cosmetics etc. / finished goods. This would also help our exporters in using the cash liquidity for enhancement of the exports of our nation and will help bringing balance in trade.