Export sectors: Rs 180 billion package to be unveiled shortly

By admin       2016-10-20

                                                          Dastgir :In a bid to reduce the cost of doing business and make the export-oriented sectors competitive with other regional countries, the government will shortly announce a package amounting to Rs 180 billion, said Commerce Minister Khurram Dastgir Khan. "The package has been discussed with the Prime Minister, who has given his consent and the matter is currently pending with the Finance Ministry and the Federal Board of Revenue," said the minister. According to him, the size of package is of Rs 120 billion to Rs 180 billion and the textile sector will get the largest share of pie.The minister stated this while briefing the Senate Standing Committee on Textile Industry on challenges/crisis being faced by the industry and its consequences causing rapid shutdown of textile units in the country. The committee met with Mohsin Aziz in the chair here on Wednesday. The committee expressed its serious concerns over the decline in exports while saying that government is doing nothing in this regard to arrest the woeful export slide.The minister admitted that our exports are no longer competitive while saying that "Pakistan has become expensive," adding that India today has become highly competitive while five years back, it was far behind. In lieu of the cost of doing business including gas, power tariff, GDIC, sales tax, Pak rupee exchange rate, the government would offer drawback to the entire exports sectors, said the minister, adding that major issues were raised by textile associations in various representations including Federal Textile Board including electricity tariff; gas tariff; exchange rate; new gas and electricity connections; RLNG prices in case oil prices increases; sales to unregistered person attract 2% sales tax; sales tax refunds have not been fully paid off; Custom Duty on manmade fibers, Custom Duty and Sales Tax on cotton; sales tax on machinery; textiles policy 2009-14 pending liabilities; RD on manmade based yarn and RD on cotton yarn and fabric.At various forums, these issues were raised for early address to reduce cost of doing business and facilitate manufacturing. However, textile is a long value chain and finished product of one sub sector is the raw material of the subsequent sub sector and the issue is very complex.The committee was further informed that Prime Minister in principle has approved winding up of the Pakistan Textile City Ltd (PTCL) after due process, and directed that accordingly, Finance Division shall immediately take the lead for voluntary winding up of the Company, after meeting all necessary pre-requisites; Simultaneously, all assets of the Company shall be disposed off through an order of transfer to Port Qasim Authority, which originally leased the land to Pakistan Textile City Ltd, since the terms of lease do not allow its further sale or transfer to a third party; and Port Qasim Authority shall be responsible to settle all liabilities of the Company out of its own resources, since it will have beneficial use of the land from now onwards. The Ministry of Textile Industry has requested the Finance Division on 21 September 2016 to expedite action in the matter.The committee was further informed that Pakistan Textile City Limited was initiated in 2004 however actual development work commenced in 2007. It is public sector Company which is registered with SECP under Companies Ordinance, 1984. Since inception company faced the challenges of non-availability of requisite infrastructure, especially water, Electricity & Gas. Levelling and grading on 1250 acres including land/Nullah protection work is 100 percent complete with the cost of Rs 100 million. Because of huge fund requirement the company followed a debt model; so far company has taken Rs 2.4 billion debt from NBP. The company did not have sufficient funds; a lot of activities have been deferred. Due to lack of infrastructure company is unable to sell even a single plot, even though it is a public sector company registered with SECP having its own BoD.The company owes a debt of Rs 2.4 billion to National Bank of Pakistan out of which Rs 1.3 billion was spent on the purchase of land at Port Qasim and Rs 1 billion have so for been incurred as interest on loan. On the daily basis the markup payable is Rs 7 lac approximately. However, Finance Division conveyed the in principle approval of the Prime Minister for winding up of Pakistan Textile City Limited after due process.The committee decided to hold a meeting with all stakeholders to come up with a final and viable plan in this regard. The committee expressed annoyance over the non-compliance and no response from the Federal Board of Revenue (FBR) and gave a deadline of ten days to reply to all the pending questions and recommendations. In case of failure the committee decided to raise the issue in the Senate of Pakistan.The committee expressed concern over reduction in cotton areas as well as in production. Cotton Commissioner Dr Khalid Abdullah said that due to climate change, crops were negatively affected. Further due to low prices, growers were unable to get due return and thus failed to use maximum input fertilisers/pesticides. He further said that sugarcane and maize crops were preferred in the cotton growing areas and thus cotton area decreased. However, the committee was astonished to hear that yield as well as area of cotton crop increased in Sindh due to conducive weather. The committee also expressed anger over the dysfunction PCCC. The Commerce Minister said that government is ready to run on PPP model which is a viable solution.

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