Karachi (Press Release) Government of Pakistan must Continue EFS u/s 880 (1)(b) of SRO 957(I)/2021 for supplies against zero-rated invoices This provision is aimed at ensuring liquidity, competitiveness, and the formalization of the entire value chain for export-oriented industries.
“Export Facilitation Scheme (EFS) is inevitable and lifeline to enhance national exports and must be continued in its Original status and position prior to Federal Budget 2024-2025 with reinstatement of local procurement and allow local purchases under section 880 (1)(b) of SRO 957(I)/2021 for acquisition of input goods (to allow local input goods liable to sales tax shall be supplied against zero-rated invoices) to support entire textile value-chain creating equal level-playing field and win-win situation for all.
EFS was strategically designed with aim to uplift exports with stakeholders’ broad-based consultation to simplify and streamline export procedures making it significantly easier and progressive to enhance exports. In EFS all previous schemes were merged under one umbrella to minimize the documents requirement through simplified single window operation and enhance the accessibility to encourage the exporters.
EFS is fully automated under WeBOC and PSW to regulate the cost of compliance with real-time audits. EFS, in its Original status of 2021, has proven instrumental and crucial to facilitate exporters to ease down their liquidity pressure ensuring liquidity, competitiveness, and the formalization of the entire value chain for export-oriented industries.”, jointly demanded by Value-Added Apparel & Textile Associations Forum represented by its Chief Coordinator Jawed Bilwani, Pakistan Hosiery Manufacturers & Exporters Association Central Chairman Muhammad Babar Khan, Pakistan Readymade Garments Manufacturers & Exporters Association’s Former Chairman Ijaz Khokhar, Pakistan Knitwear & Sweater Exporters Association Former Chairman Rafiq Godil, Pakistan Cotton Fashion Apparel Exporters Association Farooq Rahman Dittu, Towel Manufacturers Association Chairman Ather Bari, Denim Manufacturers & Exporters Association Chairman Irfan Merchant, Pakistan Textile Exporters Association Former Chairman Khurram Mukhtar, Pakistan Tanners Association Chairman Hamid Arshad Zahur and other representatives and leading exporters from Karachi, Lahore, Faisalabad and Sialkot.
Jawed Bilwani emphasized the imperative role of EFS in supporting and enhancing exports stating that the scheme has also enabled other sectors of the economy for export. Since the launch of scheme in 2021, all Value-Added Apparel & Textile Associations including APTMA welcomed the scheme.
In the Inter-Ministerial Committee headed by Planning Minister Ahsan Iqbal constituted by Prime Minister, the APTMA representative articulated that all textile associations including APTMA were on one-page to continue EFS in its Original status and position prior to Federal Budget 2024-2025 with reinstatement of local procurement and allow local purchases, however, parted ways thereafter, creating misconception and unpleasant demand to the Government to impose Sales Tax on import-stage in EFS which has been strongly rejected by Value-Added Textile Exporting Associations. Imposition of Sales Tax in EFS at import stage will fail the prime objective to facilitate exporters, ultimately, causing huge liquidity pressure, unviability, in-competitiveness turning to export sabotage.
APTMA representatives have also admitted in the Inter-Ministerial Committee meeting that their yarn quality is also not at par with imported yarn as they manufacture it from locally produced cotton having contamination. All the top 100 exporters of textile products including the composite units which are members of APTMA have assented Value-Added Textile Exporters Associations’ principle stance to continue EFS in its Original status and position prior to Federal Budget 2024-2025 with reinstatement of local procurement on zero-rated invoice. Other main anticipated demands in coming Budget are to reintroduce Regionally Competitive Energy Tariffs and Restore Final Tax Regime (FTR) for exporters to make them financially viable and competitive to enhance exports.
PHMA Central Chairman Babar Khan addressing the joint press conference refuted the negative propaganda of APTMA and its misleading and uncalled-for demand to impose Sales Tax on import-stage in EFS terming it unfair. He voiced that Spinning is a sub-sector of textile and the Value-Added Textile sector is of the firm view to support and benefit entire textile value-chain. The Government is responsible to give a pragmatic policy to cover the entire textile chain and exporting sub-sector providing an equal level playing field. Historic high cost of manufacturing has affected the entire chain including the garment, spinning, ginning and other sub-sectors.
The suffering is due to abrupt policy change at the level of the Government. Apparel & Garment sector are manufacturing with highest value-addition upto 70 percent. Continuation of EFS in its Original status and position prior to Federal Budget 2024-2025 with reinstatement of local procurement on zero-rated invoice will support and facilitate exporters and industries operating in textile sub-sectors including spinners and ginners. APTMA, since 2021 till February 2025, supported EFS, why opposing today and demanding to impose Sales Tax on at import-stage? He advised APTMA to drop their irrational demand to impose sales tax on import-stage and reiterate the just plea to reinstate the local procurement in EFS. He recalled and highlighted the importance and significance of strategically designed & fully automated Export Facilitation Scheme 2021 under WeBOC & PSW, in consultation with all stakeholder Associations, being instrumental in aiming to uplift exports by simplifying and streamlining export procedures merging all previous schemes under one umbrella primarily to ease down liquidity pressure of exporters. EFS operates in a fully digitalized and real-time environment, with end-to-end traceability.
The Chairmen and representatives of Associations endorsed the view point of Jawed Bilwani and Babar Khan further articulating that the Bangladesh & Vietnam Apparel & Textile Industry is completely dependent on import-based raw material to manufactured garments meant for export whereby their respective governments have given the export industry schemes identical to EFS. Imposition of Sales Tax in EFS will also defeat the prime objective to facilitate exporters to enhance exports.
Collection of Sales Tax from Export is not a revenue as it is refunded whereby exporters have been victimized of prolonged delays. Impose of Sales Tax at import-stage in under Export-Facilitation Scheme will put deadly blow on the liquidity-starving Apparel & Textile Exporters whose Sales Tax Refunds in other head are lying pending for payment for the last several months.
Collection of Sales Tax from Export followed by refunds is just a futile exercise with no incremental impact on tax revenue. FBR, instead of penalizing and overburdening already existing exporters, should use its offices and machinery to enhance tax-base.
The Value-added Apparel & Textile Sector is of the firm opinion to continue Export Facilitation Scheme in its Original status and position prior to Federal Budget 2024-2025 with reinstatement of local procurement and allow local purchases under section 880 (1)(b) of SRO 957(I)/2021 for acquisition of input goods (to allow local input goods liable to sales tax shall be supplied against zero-rated invoices) to ensure liquidity, competitiveness, and formalization across the entire value chain—as already recommended by the Inter-Ministerial Committee headed by the Federal Minister for Planning constituted by the Prime Minister of Pakistan.
Other representatives from PHMA were Former Chairmen Chaudhry Salamat Ali, Farrukh Iqbal, Kashif Zia, Sr Vice Chairman Hazir Khan from Faisalabad, Former Chairman Shahzad Azam Khan and Zonal Chairman Abdul Hameed from Lahore, Tariq Bhatti & Khawaja Musharraf from Sialkot, PRGMEA Norther Zone Representatives Sohail Afzal, Ayazuddin and other leading top exporters from Karachi, Lahore, Faisalabad and Sialkot were present in the joint press conference.
