ISLAMABAD: In a major development, Prime Minister Imran Khan has approved in principle the continuity of energy package for export industry (textile, leather, carpet, sports and surgical) for next five years till 2024 as in the budget 2019-20, the incumbent regime had extended the availability of RLNG at $6.5 per MMBTU and electricity at 7.5 cents per unit till December 2019.
Now under the new scenario, the premier in a latest interaction held the other day with textile industry representatives decided in principle to continue the energy package till 2014 which will become the part of new textile policy 2019-24. In the said meeting, adviser to PM on Commerce, textile, industry and Production and Investment Razak Dawood was also present in the meeting, a senior official who was part of the meeting told The News. The new textile policy, upon which Dr Salman Shah, Adviser to Punjab Chief Minister on Finance is vigorously working, is to be pitched in ECC for approval which will then be ratified by the federal cabinet.
According to the top official of textile ministry, the prime minister came up with this decision when the representatives of the export industry pitched the argument that increase in exports and investment in the country for export oriented industry is linked with the long-term policies and the continuation of the energy package is very much imperative for high growth in exports.
In the high-level meeting, it was decided that the small units will also be provided with the soft loans and this step will also help in opening of the units which are closed since long. In case the long-term textile policy is approved with the said energy package and it gets implemented in letter and spirit, the massive investment of $5 billion will be made in the textile sector alone by the entrepreneurs.
In another development, FBR has also acceded to the demand of APTMA seeking the reversal of 4 percent withholding tax on entire textile value chain to 1 percent. Earlier, the top management of tax collecting agency had imposed 4 percent WHT in textile value chain instead of agreed 1 percent, which had offended the whole textile industry. Now FBR has reversed its decision showing that the incumbent regime is quite serious and is all for economic activities across the country.
However, the textile industry still wants the reversal of 17 percent sales tax imposed in the budget 2019-20 but the government seems determined to mop up this sales tax at any cost. Let’s see in the coming textile policy, the government continues to glue to its stance or change it as being desired by textile industry. The industry sources are of the view that with imposition of GST at 17 percent, the government will collect huge amount of Rs600 billion and will keep only Rs80 billion with it, but this whole process will create the liquidity crisis till the payments of the funds. And more importantly this step will increase the cost of production by Rs150 billion per annum which will render Pakistani products uncompetitive in international market. The industry also says that if the government does not provide relief to this effect then because of the liquidity crisis that will emerge in the wake of 17 percent sales tax imposition, the production cost will increase resultantly the exports will tumble by $3 billion in the next 9 months of the current financial year 2019-20.