Daily Times

KARACHI: Liquidity crunch, high production costs, tough competition with regional export players of textile and leather products and pending Sales Tax (ST) returns, Drawback of Local Taxes and Levy (DLTL), Withholding Tax (WHT) and Customs Rebates remained the major reasons behind the declining trend of textile and leather products exports.

Representatives of Pakistan Tanners Association (PTA) and Pakistan Apparel Forum (PAF) said that these factors are behind the slowdown of exports which led to lower production and closure of a number of exporting industries in both sectors that has finally resulted in the drop of overall exports.

Agha Saiddain, senior executive of PTA and Jawed Bilwani, chief of PAF were of the view that the immediate release of all pending refunds would help to arrest the declining trend in exports.

Exports of leather finished products and leather during fiscal 2017 till January 2017 stood at around $4.5 billion, with a decline trend of about 7.5 percent to previous corresponding period.

Similarly, exports of knitwear declined by -3.44 percent, readymade garments declined by -3.60 percent and of all textile products declined by -1.30 percent as compared to January 2016.

During July to January 2016-17, total exports of textile products declined by -1.54 percent over last year to $7.34 billion.

Expressing concern over the decline of leather and textile exports, PTA and PAF demands the government to immediately release all pending claims to provide relief to exporters.

Saiddain on the Incentive Package announced by government has said it becomes ineffective and unproductive for leather sector in result of inadvertent omission of related HS Codes for Finished Leather. 4112.0000/4113.1000/4113.9000/4107.1200/41.07.9200/4107.9100/4302.19 and 10/4302.1990 in the concerned SRO 62(I)/2017 February 2, 2017 regarding DLTL (Non Textile) Order 2017 issued by Ministry of Commerce for all core sectors of exports including the leather sector of the country has dragged the sector into turbulent waters.

Anjum Zafar, Chairman PTA said that prior intimation for all related HS Codes was already made to Ministry, Federal Board of Revenue and others concerned quarters well before the of issuance of the SRO to ensure incorporation of all eleven related HS Codes for the leather sector.

Recently announced export package was announced a day before Heimtextil kicked off (Jan 10-13, 2017) due to which foreign buyers immediately demanded more discounts from the exporters of Home Textile, (granted 6% rebate under this package), lamented Bilwani.

PAF is unable to understand objectives behind announcing export package a day before Heimtextil which prompted buyers to ask for more discounts.

Unwillingly the exporters had to give approximately 3 percent discounts to keep their valuable buyers.

This way the export package failed to provide any relief/benefit to the exporters of Home Textiles, Bilwani added.

Rebate on yarn exports is a big mistake in the Export Package which is benefitting our international competitors more who are getting cheaper yarn than local industries.

This will support their business and would have a negative impact on local value added industries.

Rebate on yarn should be given to indirect exports (local sales) instead of direct exports of yarn.

This will benefit not only the yarn exporters but also to the local value added products exporters, Bilwani concluded.