KARACHI: Exporters face acute liquidity crunch as huge amount of drawback of local taxes is pending against a large number of claims filed with the State Bank.
The ministry of textile industry in its five-year textile policy last September allowed drawback on local taxes and levies to the value-added textile sector to provide them a space in ever-rising cost of doing business.
Similarly, the ministry also announced relief on other accounts, including making payments for female workers towards EOBI contribution in order to support exports and to ensure that markets are not lost in the given tough global competition.
Despite the fact that the State Bank in Nov 2009 issued a notification for payment of drawback of local taxes collected from garments, home textiles and processed fabric manufacturing units but exporters complain that the payments are not being made even after filing claims.
Chairman Towel Manufacturers Association (TMA) Waqar Alam told dawn that his members were suffering from liquidity crunch at a time when high cost of yarn is already crippling the export industry.
Exporters are unable to meet their export contracts. If the government fails to look into the issue the falling exports will suffer fresh setback, he added.
He said almost all the value-added sector exports had registered a steep fall with an overall decline up to 14 per cent. The power crisis, high cost and tough competition in the world market have multiplied exporters’ problems.
Chairman Pakistan Cotton Fashion Apparel Association Rafiq Godial said that though the textile policy announced for a period of five years was dynamic but slow process of implementation is negating its real spirit.
He said that the finance ministry had already released around Rs2 billion for payment of drawback of local taxes and, therefore, the State Bank should not have any problem in making payments but one fails to understand the cause of delays in payments against such claims.
The State Bank’s notification of Nov 19, 2009 to the authorised dealers clearly stated that the drawbacks shall be allowed on shipments made till June 30, 2011, he added.
However, Mr Godial said that a large number of claims had been filed by exporters for payment of drawback but so far not a single payment had been made.
He hoped the recent announcement made by the State Bank for lowering of refinance rates by 2.5 per cent would be implemented at the earliest as exports are badly suffering on many accounts.
Chairman Readymade Garments Manufacturers and Exporters Association (Prgmea) Mohsin Ayub said that the country was fast losing markets as “our exports have become costlier than our competitors.”
He said the high cotton yarn prices and its shortage has almost made their value-added goods uncompetitive in the world market and a large number of medium and small sized units of textile ancillary industry have closed down across the country.
Mr Mohsin pointed out that the rising unemployment was further aggravating the law and order situation and street crimes had increased manifold in all the big cities.
He urged upon the governor State Bank to look into the issue of drawback personally and give much needed relief to the export trade.
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