Exporters demand continuity of sales tax zero rating regime

LAHORE: Five export-oriented manufacturer bodies have urged the government to continue sales tax zero-rating regime in the budget 2019/20, fearing the Pakistan export might drop further to $21 billion from the existing $23.7 billion.

[the_ad id=”32940″]The five zero-rated exporters’ bodies of value-added textiles, leather, carpets, surgical instruments and sports goods, based in Sialkot in an emergent meeting, hosted by the Pakistan Readymade Garments Manufacturers and Exporters Association with its Chief Coordinator Ijaz Khokhar in the chair, have shown great apprehensions on the consideration of withdrawal of zero-rated regime by the Ministry of Finance, saying it would have adverse effect on the prime minister’s policy to generate 10,000,000 jobs in the country.

Khokhar said that the textile exports from the country had already witnessed a flat growth of $11.1 billion in the first 10 months of the current fiscal year, though the value-added garment sector showed some improvement, owing to the positive measures of the Ministry of Commerce, which is now being reversed by the Ministry of Finance to generate interest-free liquidity of Rs2,000 billion at the cost of plummeting exports.

All the exporting bodies unanimously decided to have a meeting with the prime minister, intimating him that at this stage, if this facility is withdrawn, the businesses will collapse.

In the meeting with the PM, they will appeal for continuity of zero-rating facility to five export-oriented sectors in the forthcoming federal budget, as the government’s plan to withdraw the facility will have a tremendous impact on the growth and development of the export industry.

The PRGMEA chief coordinator said the withdrawal of zero-rating facility will hit the export industry hard, especially the struggling SME sector, which is the base of Sialkot industry, and from across the country as a whole contributes more than 97 percent to the total exports share of $23.7 billion.

The exporters were already facing crucial circumstances due to hike in raw material prices due to dollar speculations, with rates of cotton yarn going up by more than 20 percent during the last six weeks, abolishing the impression that the exporters are benefitting the dollar-rupee parity.

Additionally, the transportation cost for the sea and air shipments has also gone up, as the companies also charge in dollar-rupee parity, he added.

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