Karachi:The Prime Minister, Finance Minister & their Economic Team have completely neglected the Export sector, mainly the Value-Added Textile Sector which has reached to the verge of collapse owing to Anti-Business and Anti-Export mindset of the Government backed by PDM coalition of 15 political parties. Pakistan is facing most disastrous economic turmoil in the history and the sitting Government backed by PDM as well as silently supported by all other political parties are equally responsible for this financial chaos and they have collectively deviated from their responsibility to revive the economy and exports in the national interest.
In present Bangladesh and former East Pakistan there is one political party who has elevated Bangladesh’s economy to new horizons of prosperity. While in Pakistan 15 parties coalition Government has miserably failed to control the economic downfall and export decline.
Export Industries are highly disappointed and they see it as Government’s “purposeful negligence” to destroy economy, exports and industry to create chaos, spread anarchy and take some kind of “political revenge” by destroying economic structure and foundation of Pakistan.
Why should the industries, business and citizens should bear the brunt of political wrangling in the country? The Value-Added Textile Export Industries are deeply shocked and completely disappointed with the sitting Government for inattention, non-seriousness and indecisiveness and lack of productive vision and direction to take out country from ongoing severest ever historical economic crises. Such unclear direction, inattention and casual conduct of Government tantamount to total export downfall and industrial disaster.
Textile as well as other exports have faced sharp downfall and export will decline further to the lowest ebb while reserves have fallen to extreme dangerous level. The industry has reached towards the verge of closure, many industries are closed while several industrialists have planned to shutdown and shift their industries elsewhere abroad. It is on record recent huge capital flight from Pakistan to UAE where that disappointed Pakistanis are at the forefront to form companies, take golden visas and secure investments and do business with peace of mind.
Export-industries have been facing extreme liquidity crunch as the Government has stopped all the Sales Tax Refund Claims whereby exporters precious liquidity worth billions of rupees have been stuck. FBR has issued STGO to cause further disruption in processing of Sales Tax Claims without consultation and assent of stakeholder Associations. Exporters were happy with the functioning of FASTER system which was processing claims electronically as per law and rules without any delays. FBR’s FASTER system was introduced to end human intervention and process the sales tax claims electronically, while the new parameters introduced in STGO will defer the Sales Tax Claims of Exporters involving FBR officials which will again open the floodgates of corruption. As per an estimate approx 60 percent of exporters liquidity has been stuck.
The unviable textile export industry is now on verge of collapse with sharp decline in exports and Foreign Exchange earnings while the Prime Minister, Finance Minister and their economic team have closed their eyes and ears on the repeated SOS calls to save the export industries facing most difficult times in the history of Pakistan due unavailability of gas, lack of uninterrupted supply electricity, unavailability of industrial inputs/ raw materials owing to restrictions on opening of LCs, discontinuation of DLTL & Regionally Competitive Energy Tariff as envisaged in Textile Policy and excessive delays in refunds to Exporters reflecting Government’s anti-business and anti-export conduct and behaviour. The Prime Minister has no time to meet the exporters as four scheduled meetings during last four months have been postponed in a row.
In the wake of ongoing economic crises and unresolved problems and issues in the hands of the Government, the industries have been compelled to shutdown and layoffs to textile workforce around 7 million out of which 4 million is textile workforce. This was articulated in a joint Press Conference of Value-Added Textile Associations held at PHMA House, today, by Muhammad Jawed Bilwani, Coordinator Value-Added Textile Forum and Chairman, Pakistan Apparel Forum, Muhammad Babar Khan, Chairman, Pakistan Hosiery Manufacturers & Exporters Association, Khizer Mehboob, Zonal Chairman PHMA (South), Altaf Hussain, Sr Vice Chairman SZ, Naseer Butt, Zonal Chairman PHMA (NZ), Amjad Khawaja, Sr Vice Chairman NZ, Khawaja Musharraf, Vice Chairman PHMA (NZ), Rafiq Godil, Chairman, Pakistan Knitwear and Sweater Exporters Association, Mubasher Butt, Chairman, Pakistan Readymade Garments Manufacturers & Exporters Association, Ijaz Khokhar, Former Chairman PRGMEA, Aasim Shah, Chairman, All Pakistan Bedwear Upholstery Manufacturers Association, Khawaja Usman, Chairman, Pakistan Cotton Fashion Exporters Association, Abdul Samad, Former Chairman, Pakistan Cloth Merchants Association, Muzammil Hussain, Secretary General, Towel Manufacturers Association of Pakistan and various other representatives and eminent exporters of Value-Added Textiles. Representatives of Associations from Lahore, Faisalabad, Sialkot and Multan participated in the joint press conference at zoom.
Textile holds the major share of more than 60 percent in the national exports which has been declined by 29 percent year-on-year basis during the period February 2023 as compared to February 2022 to the tune of USD 487 million. Whereas, during the financial period from July 2022 to February 2023 total textile export decreased 11 percent to the tune of USD 1.35 billion as compared to previous financial year. It appears that the Government is unwilling to control the situation and wants to deliberately sabotage the industry and export.
The ever-increasing liquidity pressure and problems faced by exporters have multiplied their grievances and have also ruined their viability to operate export industries. How can the textile exporters can compete in the region or elsewhere? Prevailing cost of manufacturing of export industries is highest in the region whereby the Pakistani exporters are unable to compete. The export-oriented industries are purchasing costly industrial inputs to operate the industry which has exorbitantly increased the cost of manufacturing compelling the industry “unviable” to operate and export. Duty Drawback on Local Taxes & Levies (DLTL), an active ingredient of Textile Policy to facilitate exporters and an essential component of cost of production to enhance exports has also been previously suspended. According to WTO’s Ease of Doing Business Ranking 2020, Pakistan is ranked at 108th position which perhaps has sunk downward further. As per global survey respondents for textile manufacturing countries in Asia, for cheap manufacturing costs, currently, India, China and Vietnam are ranking on top three positions respectively. Bangladesh is 6th and Sri Lanka is 10th in ranking while Pakistan is missing in such recent survey owing to daily increasing cost of manufacturing amid instability in the local currency and economic indicators. Restrictions on import of materials for the purpose to manufacture goods meant for export still prevail.
It is an irony that exporters who are earning dollars for country have been kept in third priority for import of raw materials while essential items like wheat, edible oil etc are at first priority and energy imports like petroleum products are on second priority. The export sector which earns foreign exchange is placed at third priority while sectors which spends foreign exchange heavily are placed on first and second priority questions the intellect of Government’s policy makers. How could you spend foreign exchange on essential items and energy if you could not earn it first? Besides, precious liquidity of Textile Exporters is also stuck with the Government and Sales Tax Refunds which must be released in 72 hours of approval of eRPOs have been lying pending for release for over two months period because FASTER system has been made dysfunctional. The performance of sitting Government during its tenure of around nine months is very poor and two Finance Minister being appointed during the period have been failed to address and resolve the ongoing economic crises. It is highly unfortunate that neither the Prime Minister nor Finance Minister or other relevant Ministers of the Cabinet have time to meet the exporters.
The confidence of exporter industrialists have been shaken and they also have lost hope in the Government in the wake of failure to strengthen the economy. Industries cannot operate under extreme financial stress and economical crises whereby the default alarm bells are continuously ringing, while the Government’s Finance & Economic team and all concerned in coalition Government are seem sleeping. Utter silence and no practical actions from the PM to FM, National Assembly to Senate and from Bureaucracy to Establishment appears to be “non-serious” in national interest. Rupee-Dollar parity and inflation are unbridled and harsh and all claims of the Government proven to be sheer eyewash.
The country is in the shackles of a dollar crisis and the economy is facing an emergency situation. The current dollar crisis can be overcome only by promoting exports. The government is only trying to increase the amount in the Benazir income support program promoting beggary and tax evasion.
The Exporters are highly distressed and a perception and feeling is emerging that nobody in the Government seems thoughtful of the situation and has not uttered a single note of care for the industries. Export industries are functioning under-capacity owing to high cost of manufacturing. What steps did the government has taken to increase exports till date? Should not the Government convey clearly if they have intention to close the industries and destroy exports of Pakistan?
