- Value-added textile sector warns of job losses.
- Says exports have declined sharply.
- Around 7 million workers likely to lose jobs.
KARACHI: Lamenting the current economic crisis, Pakistan’s value-added textile sector feared that more industries would halt their operations, which would increase the number of layoffs, The News reported Tuesday.
Associations representing the value-added textile sector, while speaking during a joint presser, said that other exports have declined sharply along with textiles. They said that it is likely to further decline to the lowest ebb amid dangerously low foreign exchange reserves.
Participants included Value-Added Textile Forum Coordinator and Pakistan Apparel Forum Chairman Muhammad Jawed Bilwani, Pakistan Hosiery Manufacturers and Exporters Association Chairman Muhammad Babar Khan, PHMA Zonal Chairman Khizer Mehboob, Pakistan Knitwear and Sweater Exporters Association Chairman Rafiq Godil, Pakistan Cloth Merchants Association former chairman Abdul Samad, and chairman of the Towel Manufacturers Association of Pakistan.
They pointed out that industries were compelled to shut down and lay off around 7 million workers, of which 4 million were the textile sector’s workforce.
Raising the matter of letters of credit, the industry representatives said that import of necessary raw materials and accessories with even nominal values such as $5,000 were denied, which dented export orders. This caused severe disruption and delays in completion and even cancellation of export orders.
This situation also led to port demurrage of various consignments, which exceeded the cost of those materials that were damaged and would now be auctioned as they were of no use to export industries.
Recently, textile exporters were also deprived of their remittances to participate in a global textile exhibition scheduled in Germany and barred from sending exhibition materials via an international courier. Participation only became possible after the intervention of the Trade Development Authority of Pakistan, which sought special permission from the State Bank of Pakistan for the purpose.
The value-added sector demanded the government to give it first priority instead of third in imports of raw materials compared to the imports of even essentials like wheat and edible oil and energy.
Decrying the delay in the release of sales tax refunds, they asked the government to disburse the amount in 72 hours after approval of eRPOs instead of delaying it for two months.
Industrialists have lost faith in the government because of its failure to strengthen the economy. It was impossible to operate under extreme financial stress and an economic crisis. All priority should be given to the value-added textile exporters, the presser participants demanded. The government should allow exporters to spend 20% of their foreign remittances on the import of raw material and accessories.
SBP has already allowed exporters to retain 10% of their export proceeds in Exporters Special Foreign Currency Account to spend these US dollars on various purpose e.g. foreign consultant payment, hotel booking and travelling, payment for IT equipment and software, lab testing charges, audit/ inspection/ certification charges etc.
Talking about the gas crisis, the industrialists said that amid the gas crisis in the country, particularly in Karachi, they felt deprived of a level playing field and a viable business environment.
Bulls Reenter PSX: The KSE-100 Rises More Than 886 Points
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During the first trading session, the benchmark KSE-100 index increased by 886 points to 61,350.48 points.
Pakistan’s steel prices are rising; get the latest figures here
Another increase in steel prices has resulted in higher construction expenses in Pakistan. The economic downturn and continuous shipping delays have resulted in sharp price increases for building supplies, which has an effect on those who are planning to construct homes.
Due to increased manufacturing costs and supply chain interruptions brought on by the Middle East crisis, the price of iron, commonly known as steel rebar, has increased by Rs5,000 per ton. Local and imported steel rebar now costs between Rs240,000 and Rs260,000 per ton as a result of this most recent rise.
The cost of branded iron went from Rs255,000 to Rs260,000 per ton, while the cost of local iron climbed from Rs236,000 to Rs240,000. Furthermore, the cost of scrap or unprocessed iron has increased to Rs160,000 per ton inin the iron and steel markets.
The impact of the skyrocketing steel prices will be exacerbated by any more interruptions in the raw material supply chain. The cost of cement, on the other hand, has somewhat decreased and is at Rs 1,246 per bag.
Up 30% to Rs 5.1 trillion by mid-February, FBR collected
The total increase in domestic taxes has been around 40%, whilst import duties and associated levies increased by 16% between July 2023 and January 2024.
With the recovery of the GDP and increased inspection of FBR collection, the growth in revenues accelerated.
Up to mid-February, FBR receipts increased by 30% to Rs. 5.1 trillion. Nevertheless, decreases in import tariffs over time and, more recently, import license limits implemented by the State Bank of Pakistan (SBP) to manage the country’s balance of payments in the aftermath of foreign exchange shortages, were mostly responsible for the decline in the rise of import taxes.
However, the impact of improvements in import valuation, which resulted in collections of Rs 151 billion, as well as the anti-smuggling campaign, which saw a surge of about 69% in the current fiscal year over the previous one, are also included in the income collected from imports.
The statement said that there was room to improve anti-smuggling operations by considering expanding Baluchistan’s customs force, which now only has 378 anti-smuggling employees out of 20,000 total.
The mobilization of domestic tax income, which accounted for more than 64% of all revenues received in the current fiscal year, was hailed in the statement as a welcome change.
In parallel, the percentage of import duties has decreased to 36% from over 50% just three years prior. The main drivers of this increase in revenue were the several taxes sources. From Rs. 1,751 billion to Rs. 2,447 billion, income tax receipts increased significantly—by 40%.
Banks, the petroleum and oil lubricants (POL) business, the textile industry, the electricity sector, the food industry, and a number of service industries were among the major income tax payers. Up to mid-February, FBR receipts increased by 30% to Rs. 5.1 trillion. Notable rise was also seen in sales tax receipts, which increased by 19% from Rs. 1,480 billion to Rs. 1,766 billion.
POL, the electricity sector, the food sector, the automobile sector, the iron and steel sector, and the chemical sector were important growth drivers.
The amount collected in federal excise taxes increased significantly by 61%, from Rs. 190 billion to Rs. 307 billion.
Taxes on tobacco goods, the cement industry, drinks, airlines, fertilizers, and the automobile sector were the main causes of this increase. The amount collected in customs duties increased by 14%, from Rs. 552 billion to Rs. 629 billion.
The POL, automobile, iron and steel, electronics, and food industries were among the main donors to customs duties.
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