Pakistan Textile Mills Association (APTMA) is Anticipating the significant increase in textke exports,The textile industry has informed the federal government of its goal of reaching 45% of exports by May and 55% by June.
Pakistan Textile Mills Association (APTMA) CEO Shahid Sattar said in a letter to Abdul Razak Dawood, Commerce Secretary for Advisor, that given the US and European demand, the aforementioned goals can be difficult for online sales only.
He claimed that textile exports fell by 64 percentage points in April compared to the same month a year earlier, meaning the textile industry was able to export 36 percent of its capacity, even in the blackout period (closing markets and transportation services).
"Our small saving factor is that many of our industries have chosen new lines for the supply of hospital and PPE clothing and have acquired fair market share," said Sattar, recognizing the role of the consultant in obtaining the necessary approvals in this relationship of Drug Regulatory Authority in Pakistan.
The CEO said that, apart from falling demand, another serious obstacle to the recovery of exports is the complete lack of liquidity in the market.
"The monetary crisis was exacerbated by the full closure of domestic retail, the cancellation of credit-based export orders, extra time for payments from buyers in the export sector and the failure to defer interest rates in the quarter ended March 30 and interest as of March 30, June and amounts determined by the Federal Board of Revenue (FBR). "
Sattar said the FBR levied VAT on all inputs, but did not refund VAT on exported goods until January 2020.
In addition, the FASTER system did not take into account the full amount of the claim in the VAT return and a large part of the amount was canceled. neither paid, turned down or postponed.
The APTMA official said the association has raised this issue with the FBR over the past eight months, but to no avail.
“The FBR FASTER system has another serious drawback: there is no system to resolve deferred payments. These basic shortcomings make up about 25 to 35 percent of the required amount. And this amount equates to a turnover of 4 to 5 percent, which corresponds to the overall profitability of a large majority of textile companies. "
He explained that this system is unresponsive and cannot handle the complexity of the textile sector and that serious revisions and changes are needed.
Sattar found that the interest rate on loans that ended March 30 was estimated at Rs. 26 billion (Rs. 700 billion at 15 percentage points) plus Rs. 4 billion (Rs. 30 billion in concession financing). "According to banking practices, KIBOR plus base rates are set on the last day of each quarter. Since SBP's rate cut has been in effect since April 16, the industry continues to pay the higher rates of about 15 to 16 percent."
He further claimed that the total debt of the textile sector is estimated at 1 trillion rupees, adding that the industry simply does not have the liquidity to pay these amounts, as well as the VAT on intermediate consumption, which will then remain in the system for another six months gets stuck
