Pakistan’s textile exporters are facing a difficulty because of a delay in refunds. They are facing liquidity and cash flow problems and are unable to fulfill their export commitments. Exporters were given assurances the new refund system would be user-friendly and refunds would be processed without human involvement. A refund system for five export sectors was introduced by which sales tax refunds for exporters were be paid within 72 hours. However this system is a very cumbersome and complicated process.
As of now only 0.15 per cent of sales tax claims have been approved. The industry says the sales tax percentage may be increased gradually for the five export sectors, if refunds are paid within the specified time. In addition exporters want an enabling business environment and a level-playing field. Pakistan’s textile exports remained flat during the first five months of the current fiscal year as the value-added sector couldn’t perform up to the mark despite the constant currency devaluation against the dollar. This export sector is the backbone of Pakistan’s economy and earns a major amount of foreign exchange and revenue. Besides, the sector is also labor-intensive and the largest employment provider and generator. Value-added textile exporters say they are battling for their survival in the global market due to costly inputs and high cost of manufacturing.