KARACHI: The Pakistan Tehreek-e-Insaf (PTI) government has decided to continue providing incentives to the country’s leading textile sector in a bid to boost value-added textile exports to $30 billion over the next five years.
“A road map to grow value-added textile exports to $30 billion, through a comprehensive textile policy (for the next five years – 2019-24), will be rolled out by the task force led by Dr Salman Shah in the next eight weeks,” Pakistan Textile Exporters Association (PTEA) Patron-in-Chief Khurram Mukhtar said, after holding a series of meetings with high government officials from May 8 to 19.
The Punjab government has recently appointed Shah as the adviser to the Punjab chief minister on economic affairs and planning.
The PTEA patron-in-chief, along with other colleagues and delegates, held a series of meetings with Adviser to PM on Finance Dr Abdul Hafeez Shaikh, Adviser to PM on Commerce and Textile Abdul Razak Dawood, Federal Board of Revenue Chairman Shabbar Zaidi and other key officials at the Ministry of Finance in May.
The previous five-year Textile Policy 2014-19 is going to expire by the end of June 2019. The government has, however, failed to achieve the target of doubling value-added textile exports to $26 billion under the policy.
“Textile exports in first nine months of the current fiscal year, however, grew 19% in quantity and 3% in value due to the exchange rate adjustment,” said Mukhtar.
“The special energy package will continue for the five zero-rated sectors; electricity at 7.5 cents per kilowatt-hour and gas at $6.50 per MMBtu,” he said.
The government has decided to increase financing under the subsidised export finance scheme (EFS) and long-term financing facility (LTFF). “Currently, the total textile sector exposure stands at Rs1,009 billion. The share of subsidised loans stands at 41% of the total exposure,” he said. “The EFS ceiling will be increased by Rs100 billion and that of LTFF by Rs200 billion,” he added.
“The drawback of local taxes and levies (DLTL) scheme will continue for the five zero-rated sectors,” the patron-in-chief said.
DLTL was announced in the outgoing textile policy for the exporters of textile products on the free-on-board value of their enhanced exports on an incremental basis if exports increased more than 10% over the previous year’s exports.
In the meetings, it was noted that the zero-ratings of export sectors is a sensitive issue. The FBR chairman will take a final decision in this regard in consultation with all stakeholders.
The Ministry of Finance has released Rs12 billion in refunds under the Duty Drawback of Taxes (DDT) scheme for the textile and non-textile sectors, which was received by all exporters recently.
Road map for remaining refunds of Rs115b
The Federal Board of Revenue (FBR) would issue promissory notes for sales tax refunds of Rs40 billion by the end of May if all exporters opened an account with the Central Depository Company (CDC). Sales tax refunds stand cleared till November 30, 2018, he said.
Another Rs25 billion would be released for the DLTL/DDT schemes till June 20, 2019. The FBR will also issue promissory notes of Rs50 billion having sales tax refunds and income tax by the end of July 2019. The promissory notes will be of three-year tenure with an interest rate of 10%.
The meeting decided on a 5% customs duty to be applied to raw cotton imports from July 1, 2019. Support price will also be announced for the raw cotton based on export parity.