Pakistan’s five export-oriented manufacturers’ bodies, primarily based in Sialkot, have urged the government to continue the zero-rating sales tax regime in the budget 2019-20, fearing the country’s export might drop further to $21 bn from $23.7 bn now. Such a step would have adverse effect on the policy to generate 10,000,000 jobs, they feel. The five zero-rated exporters’ bodies—of value-added textiles, leather, carpets, surgical instruments and sports goods—recently called an emergency meeting hosted by the Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA).
PRGMEA Chief Coordinator Ijaz Khokhar observed that Pakistan’s textile exports have already witnessed a flat growth at $11.1 bn in the first 10 months of the current fiscal, though the value-added garment sector showed some improvement owing to the positive measures of the Commerce Ministry, which is now being reversed by the Finance Ministry to generate interest-free liquidity of `2,000 bn at the cost of plummeting exports. The participants decided to have a meeting with the Prime Minister to apprise him that if this facility is withdrawn, many businesses may simply collapse, according to a report.
Khokhar said the zero-rating regime was removed twice in the past but proved unsuccessful due to sales tax refund issues. He wondered why it was being considered for the third time by the Finance Ministry when refunds of over `200 bn were already pending for the last few years. Criticising the Federal Board of Revenue’s (FBR) proposal to suspend this facility, he said FBR wants to end the incentive just to make its balance sheet correct.