The Pakistan Hosiery Manufacturers Association has termed the budget a hoax, stating that the value-added textile apparel exporters and manufacturers have been ignored totally, as no major incentives have been suggested in the budget for them.
With charged emotions, the members of the apparel sector assembled at the PHMA zonal office and expressed serious concerns over the new budget, protesting over the absence of any support for the ailing textile sector and its dwindling exports.
PHMA vice chairman Shafiq Bttt said hat Pakistan’s export has declined massively due to the outbreak of coronoavirus throughout the world. The country’s exports have reduced to $957 million in April 2020 from $2.089 billion in the same month of the previous year showing massive decline of 54.19 percent.
In view of declining exports, the government must have announced some relief to support the export sector, he said and added that PHMA had suggested the authorities to revive zero-rated status to the export-oriented industry to resolve the liquidity crunch due to stuck up refunds. The textile industry was also demanding a reduction in the turnover tax, enabling the industry to compete with regional competitors. He said that PHMA had also demanded of the continuation of energy package for export industry to ensure the provision of electricity at 7.5 cents per kWh and gas at $6.5 per MMBTU in next budgetary year but no recommendation of exporting sector was entertained by the government in Budget.
Shafiq Butt said that budget has become a bitter pill for the businessmen who are finding it difficult to swallow it. The withdrawal of zero-rated facility dismayed the exporters, while cost of production are continued to rise.
The all members of the PHMA had been dismayed since the withdrawal of zero-rating facility. He said despite firm assurance by the authorities that it would be an uphill task to get refund of 17 percent sales tax from Federal Board of Revenue. He said the textile sector would be ruined as a result of this step.
He quoted the International Monetary Fund (IMF) which had recently projected that Pakistan’s exports and imports both would reduce due to the economic shocks from the rapid propagation of the COVID-19 outbreak. Exports are estimated to reduce by $1.86 billion to $23.732 billion during FY21. Similarly, imports are projected to decline by $4.64 billion to $48.291 billion during the outgoing financial year.
Data on container traffic at Pakistan’s two major ports shows that a sharp decline in export cargo handling since mid-March. This is consistent with the cancellation of export orders or requests to delay the shipments when the lockdown started in Europe.
The PHMA leader was of the view that fall in oil prices and weaker import demand provide some support to the current account but the COVID-19 shock will have a severe impact on the balance of payments especially declined remittances and exports. It will result in new external financing needs of about $2 billion, which can only be met through jump in exports.