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Tag: All Pakistan Textile Mills Association

  • Budget fails to address industry issues amid COVID crisis: APTMA

    Budget fails to address industry issues amid COVID crisis: APTMA

    KARACHI: All Pakistan Textile Mills Association (APTMA) has rejected the federal budget 2020/2021 saying that the budget has failed to address serious industry issues in the light of the worldwide Covid-19 created crisis.

    This is likely to lead to large scale unemployment and closures and as the market dynamics have changed Post Covid, it said in a statement issued on Monday

    Bold and direct steps were required to retain our export earnings and maintain employment in a shrinking world Market due to lack of demand especially textiles which constitute 60 percent of export earnings.

    It said our Balance of Payments position is likely to worsen as a result of the lack of appreciation of the issues facing exports and the expected 20 percent drop in remittances (World Bank estimate) due to large scale layoffs in the Gulf countries and Saudi Arabia.

    Resolution of followings is requested at earliest;

    1. Provision of Regionally Competitive Energy Prices

    Continuation of regionally competitive fixed electricity tariff at 7.5cents/KWh and $ 6.5 per MMbtu for RLNG/gas across the value chain to ensure competitive export pricing.

    Non continuation of regionally competitive energy rates will lead to direct closure of around 30 percent of factories within six months.

    Unless corrected, as of July 1st, 2020, exporting sectors will be charged Rs 24 / kwh as normal B3 industrial tariff instead of Rs 12 earlier and even if RLNG is continued at $ 6.5 /MMBTU this contrasts with $ 3.5 RLNG /Gas tariff for India and Bangladesh. Meanwhile Electricity Prices in India have seen a further drop of 16 percent over the last 2 months while currently averaging about 7.2 cents/kwh for Industry. Energy accounts for 35 percent of conversion costs in the Textile value chain and therefore competitive pricing of exports is very highly sensitive to Energy pricing.

    It had been agreed that Rs 20 billion will be allocated for energy for use in maintaining 7.5 cents / kwh for electricity and $ 6.5 / MMBTU for RLNG/ Gas. The budget however only allocates Rs 10 billion for RLNG.

    Competing countries are already poised to combat highly competitive market conditions through cheaper electricity and gas rates.

    2. Zero Rating/ 17 percent GST

    Continuation of 17 percent GST is not sustainable as by design GST refunds of 5 months remain in pipeline.

    As a result Rs 20 billion per month has shifted from the coffers of the industry to FBR (amounts to Rs 100 billion plus which is in process at all times).

    This has increased the cost of doing business by about 6 percent.

    Sales tax exemption on imports through Bond, EOU & DTRE would be withdrawn immediately.

    17 percent is a very high level incentive to cheat. A lower rate would;

    a) Allow Proper Documentation

    b) Increase FBR Revenue through wider application

    c) Allow organized domestic retailers to compete in the 13 Billion dollars domestic textile market.

    We therefore requested the government to restore zero rating or to reduce sales tax rate to 5 percent across the value chain.

    3. 1.5 percent Turnover Tax/ Minimum Tax

    This tax increases cost of exports by an average 5-6 percent as the tax is levied on the same goods multiple times as it passes through the value chain.

    The Textile Industry works on very slim margins and turnover tax acts as an accelerator to early closure of mills.

    Continuation of 1.5 percent turnover tax in a situation where there will be no profitability is completely unjustified.

    4. MMF & Polyester Staple Fiber

    There is 7 percent customs duty on the import of polyester staple fiber with total import expenses in the range of 20 percent including antidumping duty.

    Polyester staple fibre is a raw material of the industry and as repeatedly committed by the government should not be subject to any duties.

    More than 60 percent of world textile trade is in MMF materials and this duty protection given to obsolete plants in Pakistan is denying the Pakistani industry any chance to compete in this growing majority section internationally or domestically.

    Any protection to domestic polyester plants may be given directly by the government and not at the cost of our country’s economic future.

    5. DLTL

    With refunds of approximately 5 percent due on $ 10 billion exports the quantum of DLTL due will be Rs 80 billion. This was also the amount requested for allocation by Ministry of Commerce.

    The budget has allocated only Rs 10 billion for DLTL. DLTL is a calculation of government taxes component in the cost of exports and if this is not catered for will further weaken our export competiveness.

    6. TUFF

    Rs 4.5 billion are pending under TUFF scheme.

    Whereas amount allocated in this budget for TUF scheme is only Rs 400 million.

    The amounts have been due for the past 7 years and this sort of delay annuls industries’ faith in Government commitments.

    7. New Textile Policy

    Implementation of the in principle approved Textile Policy is required in true letter and spirit for Pakistan to maintain and increase employment and exports.

    It may please be noted that without correction of these issues in the budget proposals, the industry will contract by 30-40 percent and well over one and half million people will lose their jobs.

  • APTMA demands gas tariff reduction up to 40 percent

    APTMA demands gas tariff reduction up to 40 percent

    KARACHI: All Pakistan Textile Mills Association (APTMA) on Monday demanded the government of reducing gas tariff by 35-40 percent for export oriented sectors in line with significant deline in international oil prices.

    Zahid Mazhar, Chairman, APTMA Sindh-Balochistan Region has demanded the Prime Minister Imran Khan and the Economic Managers of the Government to reduce the indigenous gas tariff for the five export oriented sectors in line with major reduction in oil prices in the international market, to recover from the negative impact of Coronavirus (COVID-19) on the economy and exports.

    Mazhar said that the wide spread of COVID-19 Pandemic has severely disrupted the global economy so large that some economists have suggested that it will be even worse than the great depression.

    In case of Pakistan due to slowing down of the growth momentum, the growth rate would be far below the target of 2.4 percent initially fixed for the current Financial Year, now expected to end up in negative growth of -1.5 percent.

    To offset the devastating impact of Coronavirus on the economy, industry and international exports, the rate of natural gas for the industries, specially the export oriented industries including their gas power generation plants which may be part of the same concern or associated concerns incorporated separately, should be reduced by at least 35 to 40 percent as the cost of energy is the major component of the total cost of production.

    The drastic fall in the international oil prices to around $40 from the previous level of $65 also justifies the reduction in gas prices, Zahid Mazhar added. In India the prices of gas have already been reduced drastically.

    Pakistan needs to capitalize on its best trait to grab the post Covid Opportunities and that opportunity is Exports of Textiles.

    Only Textile can help us get out of the present crisis and bring massive foreign exchange and provide employment to match the targets of the Prime Minister.

    Pakistan’s textile sector contributes 8.5 percent in GDP, employs 40 percent of the national labour force and contributes to almost 60 percent of total exports.

    Already in the international export arena the countries (especially competitors of Pakistan) are going out of way to grab lost markets and exploring new markets.

    Export oriented Countries are reducing utility (Power & Gas) rates to make their industries competitive and position themselves into the international markets, especially US and Europe.

    Pakistan’s textile exports are already facing the negative consequences of high energy tariffs relative to other competing countries. It is now or never situation for the textile industry to grab the market share, which cannot be achieved without government intervention by reducing the cost of production.

    Therefore the cost of natural gas which composes of a big chunk in the cost of production should be reduced with immediate effect in the best interest of the economy and the Export Oriented Textile Industry.

  • APTMA demands allowing textile downstream supply chain operation

    APTMA demands allowing textile downstream supply chain operation

    The All Pakistan Textile Mills Association (APTMA) has fervently appealed to the Sindh government to lift restrictions on the textile downstream supply chain, emphasizing the urgent need to resume operations to prevent a looming unemployment crisis.

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  • APTMA demands sales tax zero rating revival

    APTMA demands sales tax zero rating revival

    KARACHI: All Pakistan Textile Mills Association (APTMA) on Wednesday demanded restoration of sales tax zero rating as authorities failed to fulfill commitments of repayment of refund under new online refund system.

    In a letter sent to Abdul Razzaq Dawood, Advisor for Commerce, Textile, Industry & Production and Investment, the association informed that since domestic sales constituted 50 percent of textile output, zero rating led to sales tax evasion to the tune of $12 billion sales.

    At the time, APTMA had proved that this was a false assertion and this fact has now been admitted by FBR. This FBR has now stated on record that the domestic sales of the textile sector only account for 20 percent of the overall value of textile production of the country.

    The APTMA said that the misplaced withdrawal of zero rating, the entire textile industry has suffered immensely and the levy of sales tax in its present form and design has led to almost Rs20 billion (5-6 months total impact Rs100 billion) liquidity moving from the industry to FBR.

    It is further informed that prior to July 2019, the industry had become competitive and profitable and if the zero rating scheme would have continued these funds would have been spent on new projects, upgradation and expansion of the industrial base and resulted in increased exports for the country. The economic cost of the withdrawal of zero rating has been colossal.

    The amount of sales tax being paid by the industry is even more that the annual profits of most companies. Many companies have had to borrow from banks to finance this unjustified levy resulting in an increase in their cost of production.

    “Thus, negating the government claims to move on a policy of reducing the cost of doing business in Pakistan.”

    At the time of withdrawal of SRO 1125, the government had assured the industry that it would review the situation in 6-8 months’ time. More than nine months have now passed, and it is evident that the Sales Tax system is not contributing significantly to the FBR kitty.

    On the other hand, the entire government, FBR and the entire industry is constantly holding meetings and wasting precious time and money on resolving the issue of refunds.

    Sales Tax refunds are not forthcoming as per the promised and unequivocally stated claims that payments would be made would be paid within 72 hours of filing of H forms.

    This has not happened and the sales tax claims even after filing of H forms have remained unpaid for months on end.

    In fact, the flow of quantum of refunds was very tightly regulated by the Ministry of Finance/FBR and processing of payments limited to the quantum/value predetermined by the Ministry of Finance.

    The Sales Tax returns/H forms were routinely deferred or rejected by FBR on artificial limits established by them which had no basis in reality of the industry.

    In other words, nothing had changed from previous years in terms of refund processing.

    The situation post-Covid19 has changed drastically for the industry, as export orders have been cancelled, payments due against LCs delayed, and fresh orders not forthcoming.

    This is because of a complete collapse of markets and demand for textiles in Europe and USA. Circumstances are not expected to return to normalcy for quite some time.

    It is not possible to expect the value chain to keep on paying Sales Tax with little chance of obtaining their refunds in a timely and agreed manner from FBR.

    This delay results in affecting the entire supply chain as the exporters delay payments to their suppliers who in turn are forced to delay down the line.

    This has resulted in severe cash flow problems in part owing to the banks reluctance to finance these payments.

    Under these circumstances, the association demanded the immediate restoration of SRO 1125 i.e zero rating for the textile supply chain. “Should government still wish to collect sales tax on domestic sales, from a market that is already in dire straits, then it should collect the Sales Tax at the Point of Sale.”

    In the foreseeable future the continuation of the Sales Tax regime applicable to an industry with 80 percent exports is counterproductive and will make recovery of exports to any significant level post-COVID very difficult and even make it impossible.

  • APTMA demands deferment of utility bills, interest payment

    APTMA demands deferment of utility bills, interest payment

    KARACHI: All Pakistan Textile Mills Association (APTMA) has demanded the government of granting deferment of utility bills and interest payment against loans as industry was facing acute liquidity shortage.

    APTMA Chairman Zahid Mazhar emphasized that currently there is an acute shortage of liquidity and it is impossible for the mills to pay the utility bills.

    He requested the government to come to the rescue and immediately announce the deferment of payment of gas and electricity bills by the industry for a period of at least one month.

    He further demanded deferment of payment of interest on short term loans for at least three months. He also pointed out the dire need to immediately bring down the rate of interest to 5 percent.

    Zahid Mazhar, appreciated all the positive steps the provincial and federal governments have under taken to control wide spread of Coronavirus (COVID-19) Pandemic and to combat its adverse impact.

    He said that due to drastic slowdown of domestic as well as international markets and delay in receipt of payment from them in addition to cancellation of export orders even from big organizations and large scale buying houses, export oriented textile industry is facing worst ever liquidity crisis.

    He said the Coronavirus (COVID-19) Pandemic is having extremely negative impact on Pakistan’s economy. Though the government has taken some positive steps like deferring loan repayments and speeding up of refunds but it will fall far short of keeping the industry afloat.

    He further said that drastic situation needs drastic measures to be taken to save our export oriented textile industry from the negative economic impact of Novel Coronavirus (COVID-19) as it is showing adverse impact on exports.

    He demanded the government to provide immediate relief in the best interest of industry, economy and the people as the impact of slowing of economy and lockdown can only be shielded by the industry for a month or two beyond which there will be no capacity to retain workers leading to massive unemployment.

    He requested the Government of Sindh to allow running of those textile mills which have labour residing within their residential colonies as well as those export oriented units which have export orders in hand.

  • Exporters missing shipping deadline due to strike

    Exporters missing shipping deadline due to strike

    KARACHI: All Pakistan Textile Mills Association (APTMA) on Wednesday said exporters are missing shipment deadline due to transporters’ strike.

    The APTMA in a statement said that the recent strike by the transport sector is going to impact exports significantly as there are no empty containers are available in upcountry for exports.

    APTMA spokesman said that as a result of unavailability of empty containers in upcountry due to strike of transport sector, exporters are missing shipment deadlines.

    One additional factor that is a major cause of the scarcity of containers is the large number of orders that have been received from China after the effectiveness of the Phase II of the Free Trade Agreement between China and Pakistan.

    APTMA Spokesman further said that even if the containers were to be dispatched from Karachi today they would take 3 days to reach upcountry where exporters have already have had 2 days without containers; effectively a further week of exports would have been delayed/lost.

    Under these circumstances, we request the government to take immediate action for resolving the issue so that no more exporting deadlines are missed.

  • Export commitments to be missed on gas supply curtailment: APTMA

    Export commitments to be missed on gas supply curtailment: APTMA

    KARACHI: All Pakistan Textile Mills Association (APTMA) in a statement on Thursday said that industries will fail to meet export commitments due to 50 percent reduction in gas supply.

    Zahid Mazhar, Chairman, APTMA, Sindh-Baluchistan Region demanded the government to restore full supply of gas to the industries located in the province of Sindh and Balochistan as the industries in these province can’t operate and fulfill their export commitments at 50 percent load supply.

    Mazhar said that the province of Sindh and Balochistan are producing about 84 percent of the system gas and consuming only 39 percent of the gas produced in the country, even then the industries of Sindh province are denied of their Constitutional Right guaranteed by the Constitution of Pakistan.

    He said that the gas being produced in Sindh should first be supplied to the province and only after fulfilling the requirement of Sindh and Balochistan, surplus gas should be passed on to the other provinces in line with Article 158 of the Constitution of Pakistan.

    Mazhar further said that the textile industry units located in the province of Sindh are mostly export oriented units and these units attract priority in the allocation of energy including gas supply.

    As this is the peak season and any disturbance or short supply of gas would affect the timely shipments of export commitments resulting in not only decline in export earnings and loss of foreign buyers of textile products of Pakistan but would also result in decline in production and revenue of the government.

    He said that the curtailment in gas supply by 50 percent in addition to low gas pressure has completely disturbed the production-lines, resulting in decline exports and causing damages to industry’s costly plants and equipments.

    He further said that curtailment in gas supply is against the assurance given by the present government of Imran Khan of continuous and uninterrupted supply of energy both gas and electricity specially to the export oriented industry like textiles which is earning more than sixty percent of the much needed foreign exchange through exports.

    It is also against the government policy of industrialization and export led growth, he added.

    He said that the curtailment in gas supply by 50 percent to the Sindh and Balochistan based industry that makes about 52 percent of the country’s total exports is resulting in loss of foreign exchange and revenue.

    He said production of export oriented industries has shrunk since the export sector has been compelled to work for 50 percent of its capacity.

    In other countries governments give priority to their export oriented industry in supply of gas and energy, whereas domestic and commercial sectors are provided with LPG or LNG. On the contrary in Pakistan, our precious natural gas is being supplied to domestic and commercial sectors at the cost of industries.

    Mazhar urged the Federal and Provincial Governments and the gas utility to look into this issue on urgent basis and to ensure continuous and uninterrupted gas supply otherwise the industries would be compelled to close their operations which will create not only irreparable losses to the economy of Pakistan but would also create law & order situation due to unemployment of large number of workers employed in these industries.

  • APTMA praises policies to make textile industry viable after 10 red years

    APTMA praises policies to make textile industry viable after 10 red years

    KARACHI: As a result of the progressive policies and personal interest of the Prime Minister especially by providing regionally competitive energy tariffs the textile industry has become viable after remaining in the red for 10 long years, All Pakistan Textile Mills Association (APTMA) said in a press release on Wednesday.

    The textile industry has achieved a record increase of 26 percent growth in quantitative terms although this did not directly reflect in the dollar amounts due to a substantial worldwide decrease in textile prices.

    However if this 26 percent increase in quantity had not been achieved the exports would have been less than $ 8.5 billion, the international prices have now recovered. As per records, profits of the companies were over 5 percent.

    The companies have posted a turnover of $ 16 billion out of which $ 13.3 billion was exported and $ 2.8 billion were sold in the domestic market.

    Industry has contributed to the exchequer through income tax of Rs. 40 billion as well as various other indirect taxes and levies of over Rs. 35 billion. The importance of the industry can be assessed from the fact that it also employs over 10 million workers with many more dependents.

    As a result of the confidence reposed by the Prime Minister in the industry and the appointment of a dedicated Task Force to not only formulate but ensure implementation of a progressive textile policy, Industry is all poised to take off and double exports in the next four years. Industry as a result of the profits posted has strong balance sheets and an equity fund of US $ 1 billion earned directly from the international market. These funds can be leveraged to invest at least $ 4 billion in the next year alone.

    “We profusely thank the Prime Minister for having taken personal ownership and stewardship of the industry and chaired over a dozen meetings with the industry during this last year to resolve their issues,” the association said.

  • Textile mills demand uninterrupted gas supply for achieving export target

    Textile mills demand uninterrupted gas supply for achieving export target

    KARACHI: Textile mills have demanded federal and provincial government to ensure uninterrupted gas supply for achieving exports target.

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  • APTMA demands release of RPOs before issuance of promissory notes

    APTMA demands release of RPOs before issuance of promissory notes

    KARACHI: All Pakistan Textile Mills Association (APTMA) on Thursday demanded the Federal Board of Revenue (FBR) to release all Refund Payment Orders (RPOs) before issuance of proposed promissory notes.

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