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Tag: PRGMEA

  • PRGMEA supports proposal for revival of sales tax zero-rate regime

    PRGMEA supports proposal for revival of sales tax zero-rate regime

    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.

  • Customs e-commerce clearance facility lauded

    Customs e-commerce clearance facility lauded

    KARACHI: Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) has lauded the efforts of Pakistan Customs for establishing an e-commerce clearance facility in collaboration with the State Bank of Pakistan (SBP).

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  • Garments exporters demand sales tax zero rating revival

    Garments exporters demand sales tax zero rating revival

    LAHORE: The Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) has demanded the tax authorities to reintroduce zero-rated sales tax regime.

    In its proposals for budget 2020/2021 submitted to Federal Board of Revenue (FBR), the PRGMEA demanded restoration of zero-rated regime of ‘no payment and no refund of sales tax’ for export-oriented sectors including textile at least for one year to sustain the industry amidst the severe liquidity crunch due to COVID-19.

    The government should release all stuck claims of the exporters, including DLTL, DDT, Customs Rebates and Sales Tax rebates, as the liquidity crunch is a major stumbling block in the way of improving exports.

    It said the apparel industry should be allowed to import fabric under the SRO 492 scheme, as the weaving industry of Pakistan is unable to fulfill demand for fashion wear, adding, the government should also announce complete 100 percent drawback rate of incentive at 7 percent without the condition of increment with simple procedure and paperless working for two years (2019-2020 and 2020-2021).

    Ijaz A. Khokhar, chief coordinator PRGMEA, in a statement said they had also suggested the government that incentive amount should be directly credited to the exporter’s account at the time of realisation of export proceeds and State Bank of Pakistan may subsequently claim the amount from the government.

    Moreover, Khokhar said the government should also extend the last date for submission of claims of duty drawback.

    The PRGMEA demanded a one-window operation so that the exporters could focus on the market research and marketing for their products, besides proposing that cotton yarn, the major raw material of apparel sector, should be exempted from all duties and taxes to encourage value-addition.

    One-window operation may effectively be introduced to replace the lengthy procedures that involve interaction of manufacturer with various agencies. At the moment, different government agencies have been harassing the textile industry virtually every day. Social Security, EOBI and all other taxes should be merged and deducted at source. The government exchequer will receive more revenue, if a reasonable percentage of realised amount is deducted. And many of the SMEs companies will add in the tax net automatically.

    The PRGMEA also urged the government that the custom duty of 7 percent on import of Polyester staple fibre including a range of 20 percent anti-dumping duty should be abolished to reduce the cost of production to compete in the market.

    It further said that exporters had received just 35 percent of claims payment only, while 65 percent of the refund claims were stuck with the government, which cumulated 12 percent of the exporters’ running capital; however, the profit margin of exporters was around five to eight percent.

    “Due to availability of liquidity and smooth cash flow, the confidence of exporters will be boosted to enhance their exports and cement their business ties with the foreign counterparts to capture true business potential,” it added. The government has given assurance to clear all pending claims, but the factual position is that more and more refund claims are piling up with the payment of just a small number of claims.

    PRGMEA asked the government should announce a clear policy to finally clear all the pending refund claims.

    The trade association also requested that import of fabric be allowed under SRO 492 instead of DTRE, which was very complicated and only 2 percent exporters could avail importation under DTRE facility, whereas 97 percent SME sector could be facilitated under SRO 492, which was enforced previously.

    To compete with Bangladesh and India; it is very important for Pakistan to offer the same products as they are exporting in large variety.

    It said the incentive amount should be directly credited to the exporter’s account at the time of realisation of export proceeds and SBP may subsequently claim the amount from the government. The condition of “after receipt” should be abolished and prompt payment shall be made. Otherwise, again backlog of payments to be made to exporters shall be created as previous payments of billions of rupees have not yet been made to the exporters.

    PRGMEA also proposed that since WEBOC system was available then why do exporters need to submit the hard copies for processing of rebate and DLTL claims. “As soon as the bank may report payment realisation on WEBOC, rebate and DLTL claims should be highlighted in Green and entitled for disbursement of refund,” they added.