The government is in the process of enacting another law to be known as the “Textile Development, Regulation and Standards Act, 2017” which shall substitute Cotton Cess Act of 1923, National College of Textile Engineering (Governing Body and Cess) Order of 1983, Cotton Standardization Ordinance of 2002, and the Export Development Surcharge. The aim is to bring the entire functions of the substituted laws under direct control of Ministry of Textile (MINTEX) with certain additional functions which – either it is incapable of performing, or are already being governed/performed under other laws by other departments. If the institutions do not perform satisfactorily, their top management should be changed instead of abandoning the institutions which will virtually annihilate the expertise gained by these organisations during their decades of existence.
The following are main aims/objects which MINTEX wants to achieve with the enactment of this law, along with a focused analysis of each salient aspect of this new legislation:
1. The proposed Board, consisting of 14 Federal Secretaries/Minister level members, shall meet 2 times a year: one wonders what can be achieved in 2 meetings of the Board, which cannot be achieved by frequent meetings of the 4 Boards of the delinquent institutions.
2. MINTEX “wants to promote employment in textile”. But how they will do it is not actually clear.If the government lets the textile industry expand, instead of scuttling its growth by choking them with blocking billions of rupees worth of refund, the jobs shall automatically be created.
3. MINTEX wants ‘’to train manpower to ensure adequate supply of skilled workers’’ which is already being done by TEVTA very successfully in all provinces and running dozens of different specialized of vocational institutes. MINTEX may propose and design any number of courses, especially for textile sector which TEVTA shall be happy to include in their curriculum.
4. ‘’Establish textile institutions from Farm to Fashion products and develop textile/ garment cities’’. Why MINTEX wants to create new institutions in the presence of textiles training institutions for different fields and with international standards. The fiasco of Pakistan Textile City established in 2009 in Karachi, which is now being abandoned after millions of rupees, is fresh in everybody’s mind. This project is now being abandoned after wasting millions of rupees.
5. Mintex wants power ‘’to undertake measure to facilitate branding in international and domestic markets and increase exports by creating export promotion councils, exhibition/seminars of textile and conferences in Pakistan and abroad; and participation/facilitation of textile trade delegations’’. Instead of creating a parallel organization, MINTEX should try to improve the performance of TDAP which performs all these functions and has seriously deteriorated in the last 5 years.
The MINTEX should ensure implementation of incentives already announced, approved and notified by it. Incentives under Technology-upgrade Fund are still not being paid; MINTEX should also coordinate with Ministry of Finance to expedite sales tax refunds of over Rs 200 billion
6. MINTEX, by acquiring the authority to “prohibit, restrict or otherwise control the import and export of goods of any specified textile description, or regulate generally all practices (including trade practices) and procedures connected to the import or export of such goods’’ wants absolute and total control over the working of this sector which is a sure recipe for further disaster of this value-addition sector.
7. MINTEX also wants “to carry out audit of accounts and documents of textile industry”. One fails to comprehend the logic, desirability or legality of this clause. The companies which are already being audited by firms of Chartered Accountants as required by the Companies Act 2017 will be further audited by the MINTEX? Do they even have the capacity or legal authority to again audit the accounts? Will the Institute of Chartered Accountants of Pakistan, which is a statutory autonomous body established by Govt of Pakistan in 1961 to regulate the auditing profession in Pakistan, allow it?
8. The MINTEX shall manage suitable ‘’standardization marks,grading the cotton/cotton seed and establishing testing facilities’’although these functions can best be performed by Pakistan Standards and Quality Control Authority, Pakistan National Accreditation Council, and Pakistan Council of Scientific and Industrial Research, (PCSIR) and Central Cotton Research Institute and Ayub Agricultural Research Institute which are Government owned and performing the functions for a long time with requisite expertise. PCSIR is already in the process of setting up a Textile Testing Research Center at an estimated cost of Rs.429 Mill.
The MINTEX should ensure implementation of incentives already announced, approved and notified by them. Incentives under Technology upgrade Fund are not being paid because “the State Bank of Pakistan has to issue some sort of circular”.
MINTEX should also coordinate with Ministry of Finance to expedite sales tax refunds of over Rs. 200 Billion. The zero rating facility of coal/diesel announced in June 2016 is still not being approved by FBR, since dozens of cases are lying with FBR for the last many months whereby, as per their own law, they have to approve it with 30 days of application. MINTEX should also ensure unconditional continuation of export incentives of 4-7 percent.
Another very important matter which needs focused attention of MINTEX is their failure to achieve the target of cotton production for the last so many years. Even for year 2017-18, Pakistan Central Cotton Committee has revised downward by 12% the target, which translates into a loss of $336mn at raw material value and $1.80bn at export value. These are the functions which MINTEX should perform on priority basis instead of wasting it energies on reinventing the wheel by making further laws to substitute the existing similar laws.
The writer is a Chartered Accountant and can be reached at: [email protected]
Published in Daily Times, September 1st 2017.