Textile Exporters are highly perturbed over excessive and unreasonable delays in GST refunds which has been continuously causing liquidity problems from July 2019 when 17% GST was imposed by the Government in the previous budget despite of stiff resistance from Five Zero-Rated Export sectors. In view of ill experience during FY 2019-2020, textile exporters worried and upset as to how the Government will keep its commitment for timely refunds during FY 2020-21 as the major demand and proposals of Value-Added Export sector and all textile Associations to restore “GST Zero-Rating No Payment No Refund” or to introduce 4 percent GST instead of 17 percent went deaf on the ears of Government’s economic team and no relief was provided in the Federal Budget 2020-21. Exporters have also expressed their concern over inordinate delays in payments of customs rebate, duty drawback as well because as of today a huge amount of worth billions of rupees of exporters is still stuck up with the Government which has not been released. Textile exporters are stranded in the middle of nowhere and can’t decide about the future of their businesses in a scenario when the global business is shrinking and the Government, in contrary to regional countries, is not supporting its value-added textile sector to capture their business share in global market and bring sustainability in exports. The prevailing high sense of insecurity and uncertainty demands the Government’s support to the Textile industry according genuine considerations to their appeal to restore GST Zero-Rating No Payment No Refund system, otherwise, upgrade the system to pay refund claims electronically, without human intervention, on the submission of GD. This was stated by Chaudhry Salamat Ali, Central Chairman, Pakistan Hosiery Manufacturers & Exporters Association (PHMA).
Salamat Ali articulated that sense of discontentment is prevailing in the Textile industry and Exporters are facing extreme unrest and anxiety as the Government has completely disregarded and unnoticed the major demands and recommendations of the export sectors of Pakistan which were proposed by the Textile Associations and leading chambers of Pakistan which is unreasonable and deplorable. As per the past practice, PHMA had given its suggestions for the Federal Budget 2020-21, however, to our utmost surprise, the Government had neither consulted for budget discussion meeting nor their proposals major proposals incorporated in the budget. It is highly unethical and inappropriate that first time in the history of country, stakeholders were totally ignored for consultation twice: before and after the Budget. The textile export sector is the backbone of the economy and exports, most labour-intensive sector, also provide huge urban employment to the female workers and particularly to the lower class in the Garment units and highest foreign exchange earner is beyond the understanding. Textile Industry supports more than 40 allied industries. Disregarding the Value-Added Textile sector means Government is closing eyes wide shut towards stakeholders who contribute to more than 60 percent in national exports and highest foreign exchange earners. Exporters wants to know what are the ulterior motives behind such ignorance towards Textile industry?
The Government had also not fulfilled its commitment that exporter refunds might not get stuck up again and Government will devise an automated refund system whereby refund payment will be received upfront in 24 hours in their bank accounts after submission of GD without human involvement so that exporters would not be dependent on the FBR which was made in previous post-budget meeting at Governor House, Karachi in the presence of Imran Khan Prime Minister, Dr. Abdul Hafeez Shaikh Advisor to PM on Finance, Mr. Abdul Razak Dawood Advisor to PM on Commerce & Textile, Hammad Azhar Federal Minister, Dr. Reza Baqir Governor SBP the then Chairman FBR and Chairman Board of Investment.
Without any orientation and training and testing the accuracy and completeness of system, the Govt., also without consultation of the stakeholders – exporters, launched FASTER System by which sales tax refunds to be paid within 72 hours electronically. FASTER system could not function during first 5-6 months and remain inactive and FBR processed claims manually and SBP paid refund on advice of FBR.
In the wake of global slowdown due to COVID and imposition of 17% GST in last budget, the value added textile export sector has reached to the brink of disaster due to severest ever liquidity crisis in the history of Pakistan whereby liquidity worth billions of rupees has been stuck up with the Government.
In view of above, the value added textile sector strongly demands the Government to review its decision and restore zero rating on GST – No Payment No Refund System for textile sector or reduce GST from 17% to 4% or otherwise release complete refunds upfront on the stage submission of GD. Otherwise, the Government will be held completely responsible for closure of industries, flight of capital, massive unemployment which will not be in the interest of our beloved country – Pakistan.