Textiles support export-oriented policies

Islamabad:

As the country moves towards the negotiation of another International Monetary Fund (IMF) loan program, the textile industry has called on the government to formulate export-oriented policies by reducing energy duties and tax rates to make the industry competitive in the global market.

In a letter to Finance Minister Muhammad Aurangzeb, the All Pakistan Textile Mills Association (Aptma) stressed that as the country was about to negotiate a new IMF programme, a fundamental reform required was to promote an export-centric culture in all sectors of the economy. . He was of the view that the new program should cover the special circumstances where the essential need was the growth and expansion of exports. “This will go a long way in alleviating one of Pakistan’s most pressing issues: the chronic shortage of foreign exchange.”

Reading High costs limit textile exports

According to IMF estimates, Pakistan’s gross external financing requirements exceed $25 billion annually for the next five years. Three sources of foreign exchange to meet this requirement are foreign borrowing, remittances and exports – “the latter being the most sustainable and inclusive”.

However, exports could not thrive under the prohibitive anti-export policies implemented last year and beyond, millers said, adding that high taxes and persistent delays in tax refunds had siphoned off all liquidity from the manufacturing sectors, which accounted for only about 20% of GDP, but contributed over 60% of tax revenue. They pay 20 different federal and state taxes. In addition, electricity tariffs for industrial consumers have risen to over 17.5 cents/kWh, more than double the regional average, while natural gas prices have increased by 223% since January 2023.

There was no “economically viable source of power for manufacturing activities in Pakistan”, the textile workers lamented, adding that having learned from previous IMF programmes, raising electricity tariffs beyond the affordable price had proved counterproductive and had not desired results. circular debt continued to rise.

Published in The Express Tribune, April 18^u2024.

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