KARACHI: Exporters and manufacturers of readymade garments on Thursday supported the proposals of revival of zero-rate sales tax regime for entire textile chain.
Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) in a statement endorsed the demand of PM Advisor on Commerce Abdul Razak Dawood to seek zero-rating regime for whole textile chain in the Textile and Apparel Policy 2020-25, stating the apparel sector is eagerly waiting for the approval of it from the ECC to make future marketing plan in the light of new policy.
PRGMEA central chairman Sohail A. Sheikh and chief coordinator Ijaz Khokhar, in a joint statement issued here today, observed that restoration of zero-rating status of the textile sector is vital to maintain the momentum of present enhanced exports, as currently the sector is working at full capacity to meet the high demand of export orders.
“It is absolutely essential to sustain this momentum, as economic activities are largely restored to pre-Covid levels in the first quarter of current fiscal year 2020-21, PRGMEA central chairman added.
He said that the uptrend indicated a promising growth ahead in all major sectors especially the value-added apparel industry, but the risk of record high yarn prices amidst its severe shortage has continuously been posing a major threat to exports growth.
Apart from announcing five-year textile policy, the government will have to introduce some soft package for short-term period for the apparel industry to sustain the present growth as yarn prices has increased by 30-40 percent while availability is also very critical, he observed.
Sohail A. Sheikh said that the government can support the industry by restoring the zero rating of sales tax regime besides allowing duty-free cotton yarn, as the industry is hitting hard owing to shortage of its major raw material. Moreover, existing available stocks of cotton yarn are of the poor quality to help any sort of apparels manufacturing for export purposes.
Ijaz Khokhar said the situation demands that the government should immediately abolish customs duty and all types of taxes on import of cotton yarn and exporters should be given full liberty to import yarn from any country till the scarcity of cotton yarn is ended, as removal of just 5 percent regulatory duty could not have a significant effect in the local market.
He added that the value-added apparel sector has been affected badly due to delay in the final announcement of the new textile policy by Economic Coordination Committee of the cabinet, as the PM has already given approval in this regard. He was of the view that a delay in textile policy may result in delay or even backing out of investors from possible investments in the industry. Currently, we are in short production capacity and several exporters are refusing export orders because there is not enough capacity available in the country. A clear long term policy will give investors a clear vision that the government of Pakistan is ready to support the apparel sector of Pakistan on long-term basis.
According to him, the new textile policy carries the potential of taking the textile sector out of a crisis like situation. He hailed the PM Advisor for making efforts for incorporating several suggestions of the PRGMEA.
Sohail A. Sheikh also called for a Soft Temporary Import for Re-Export Policy especially designed for SME’s, which are 90 percent of our export industry. This is very important to manage our global supply chain. PRGMEA has already submitted a comparative study of existing SROs and new proposed SRO, which will help us cater to the new Fast Fashion & On-line Business Model.
There is a huge demand of Certified Organic Cotton by the buyers. We the apparel sector strongly recommend that the import of Organic Yarn should be exempted from custom duty and all other taxes, till Pakistan produces its own certified organic cotton.