Not to cut throats of countrymen for the pleasure of IMF- Business Community

MULTAN: June 3rd: Alliance of Recognised Chambers and Association  of Southern Punjab (ARCA) has shown its serious concern over the proposal of withdrawal of zero rating regimes would have adverse impact on export industry and urged the government to drop idea of withdrawal of zero rated facility in best interest of the country.It said that the withdrawal of zero rating facility of key five sector ie. value added textile, leather, carpet, surgical instruments and sports goods will decline further exports of Pakistan which is confronted with many challenges. This system would serious adverse implication on the entire textile value chain. Addressing a joint Press Conference here on Monday ARCA convener Khawaja Muhammad Yousaf, Ex-President of FPCCI Mian Tanvir Ahmed, President of MCCI M.Sarfraz, President of Khanewal Chamber Khawaja Habib-ur-rehman, APTMA South Punjab Chapter convener M.Anees Khawaja ,Ex-Chairman of APBUMA Syed Muhammad Aasim Shah,PCGA's Talat Suhail, Malik Altaf Arain, Ex-Presidents of MCCI Farid Mughis Sheikh & Khawaja Muhammad Usman, Hand Looms Association's Ghalib Qureshi,Pakistan Tanners Association's Khawaja Mehr Ali said that Government should not cut the throat of countrymen for the pleasure and satisfaction of IMF otherwise it would have serious repercussions.They said that unequal rate of gas, electricity for industrialists of Punjab,withdrawal of subsidy and increasing the interest rate would ruin the industry rendering millions of labourers jobless.They added that the withdrawal of this facility will increase cost of doing business high utility cost, as Pakistan's exports are already facing a tough competition in international market due to enormous facilities given by the regional countries to their exporters. They further stated that government should find new avenues for enhancement of its revenue instead of damaging the exports sector which is already on a decline. They further suggested that the government should facilitate the industrialization in Pakistan particularly value added industries for the enhancement of exports. They apprehended that the proposal of withdrawal of zero rating regime would have adverse impact on exports production and investments, as such policies would deter both local and foreign investments in the sector and chances of industry closure are too high.They said the industry is seriously concerned on the move, as the end exporter would be the worst hit due to stuck up of refunds. FPCCI's ex-President Mian Tanvir  said the regime of zero rating was introduced after due diligence by the FBR after meetings with the stakeholders and verifications by the leading auditor M/s A F Ferguson, as the government was collecting less sales tax and disbursing more refunds under the earlier regimes when wrong registration of taxpayer and flying invoices was a common practice. It also plagued the system with corrupt practices and ultimately a colossal loss to the exchequer. The government had therefore introduced zero rating regime in 2009 which is in practice since then. Only minor inputs with common use in other industries was excluded from zero rated regime and thus resulted into piling up of refunds difficult to obtain well in time. Even under the zero rating regime, a sizeable amount of industry’s refund is pending with FBR. M.Anees Khawaja of APTMA stated that discontinuation of zero rated status will result in ruin and disaster of export oriented industries, flight of capital, mass unemployment and huge foreign exchange losses.
It will also lead to corruption in connivance with dubious FBR officials under the mode of flying;'         
invoices, over invoicing, frauds in refunds etc. Further, due to significant volumes of liquidity being stuck in the form of sales tax refunds, export growth will be severely affected and we may even witness a decline in exports.More than 200 billion rupees of exporters in Refunds of Sales Tax, Customs Rebate, Withholding Tax, DLTL & DDT are already held up with Government. Syed Muhammad Aasim Shah Ex-Chairman of APBUMA said the extra-ordinary increase in quantity exports (i.e. garments by 29%, knitwear 15% and bed wear by over 10%) which has been achieved after a very long time during the period of last 10 months due to the governments energy policies, which stimulated and made the sector internationally competitive. The industry is on the verge of a takeoff with order books being full and expansion and greenfield projects just awaiting announcement of the new five year textile policy to commence.
Khawaja Muhammad Yousaf said the proposed scheme to raise revenue from the textile value chain by introducing 17 percent sales tax and subsequent refund of the same under an already tested, tried and eventually failed system would choke down the entire value chain of the industry and exports due to the liquidity constraints. The industry cannot afford to obtain funds at an exorbitant interest rate hovering around 15 to 17 percent and pay input tax and then wait for its refund. This system would serious adverse implication on the entire textile value chain.It has been estimated that raw materials as input of various sub-sectors of the textile value chain involves over Rs. 600 billion of the industry liquidity that would stuck up with the government and subsequently would become refund which is very difficult to obtain from the department. Even, it takes years to get the refund processed for the payment to claimant.The revenue from the local sales of these five export sectors can be increased by bringing the retailers in the tax net through normal regime or fixed tax regime as being contemplated for traders of Islamabad, he stressed.
Farid Mughis A' Sheikh Ex-President of MCCI said that Industrialists of Punjab are getting gas/RLNG on double prices than Sindh and KPK.How can they compete world market when they are unable to compete domestic market.He further said that General Sales Tax (GST) is in fact a consumer tax which is to be paid by the people of Pakistan and it can't be  applied on exportables.
Khawaja Mehr Ali of Pakistan Tanners Association(PTA) said that they would stop the purchase of animal skins for ten days if Government stuck to its stand.Then there would be no way for rulers to escape from nasty odour.He has expressed the hope that sanity would prevail and the economic policymakers of the government would abstain from halting the production wheel of the exporting industry, as it carries no logic in cutting the whole goat to get a piece of flesh. Khawaja Muhammad Usman said that Pakistan has agreed with the IMF to jack up tax collection target of Rs5,550 billion in the next budget for 2019-20 against revised projection of Rs4,150 billion. It will require a growth of 35 percent in tax revenues and it cannot be achieved with the status quo approach. Under the IMF programme, the government is committed to do away with zero rating regime for five export-oriented sectors, including textile, garments, carpets, surgical and sports goods. They further said that the liquidity crunch of at least Rs 700 billion would burden the sector with imposition of GST at standard rate of 17 percent. He was of the view that he had fought this battle during the tenure of PPP-led regime and won after which the exports had touched $25 billion mark. Then he said the textile sector was not fully listened to in last five years and exports nosedived. Now again the exports are picking up at slow pace but the government was moving towards choking its growth so it would result into complete drop of exports in months and years ahead in case of abolishing of zero rating regime without consideration of our viewpoint.