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News Clips 20 April, 2013

[ SHC restrains FBR from sales tax recovery from textile miller ]
[ Textile, clothing export rebounds ]
[ Exports to US surge by 49pc ]
[ Textile industry braces for criticism at today’s meeting ]

SHC restrains FBR from sales tax recovery from textile miller   [ top ]

KARACHI: A division bench of Sindh High Court (SHC) has restrained the Federal Board of Revenue (FBR) and its subordinate officers from the recovery of Sales Tax of Rs 60 million following a constitutional petition filed by a local textile mills.

The bench comprising Justice Maqbool Baqar and Justice S.M. Farooq Shah also ordered issuance of notices to the Deputy Attorney General, Federal Board of Revenue (FBR) and other respondents for May 6.

Senator Mian Raza Rabbani and Saalim Salam Ansari, advocates on behalf of the petitioner contended before the division bench that under the sales tax amnesty scheme announced by the Government, the recovery of 2 percent ST can not be shifted to the manufacturers / textile mills on the ground that the registered buyers, who are legally liable to pay the tax did not pay the same. They submitted that the law does not provide the shifting of the liability to pay the sales tax upon the manufacturers/ textile mills instead of registered buyers.

They further submitted that the demand notices issued on behalf of FBR are without jurisdiction, illegal and un-constitutional as the law and the Constitution do not provide any power to the FBR for recovery of ST of the period for which the petitioner was not under legal obligation to pay.

The petitioner's counsel further contended that the Sindh High Court has already issued interim stay order in respect of the Sales Tax on identical grounds.

Textile, clothing export rebounds   [ top ]

DAWN, Mubarak Zeb Khan, April 20, 2013
ISLAMABAD, April 19: Pakistan’s export of textile and clothing rebounded in March 2013 as it witnessed a growth of over 13 per cent from a year ago.

The export proceeds from these sectors fell by over 4pc in February 2013 from a year ago after successive growth in the past five months.

Export of textile and clothing surged to $1.167 billion in March 2013 from $1.030bn during the corresponding month of last year, showed data of Pakistan Bureau of Statistics here on Friday.

Textile and clothing products, which witnessed a negative growth are raw cotton, and cotton carded in March 2013 over the same month last year.

However, growth in exports in the month of March was mainly driven by knitwear, bed-wear, towels and readymade garments, which are valued-added products.

An official source in the commerce ministry told Dawn that exports witnessed a double digit growth because of increase in export to the European market owing to preferential market access on selected products.

The European Union preferential package on import of 75 items was in operation since December 2012.

“Our exporters have received more orders than in normal circumstances because of preferential duties,” the official added.

Since October 2013, export of textile and clothing rebounded because of a slight rise in demand from recession-hit key markets of Europe and the US, and improvement in domestic production.

As a result, overall exports rose to $18.01bn in July-March 2013 from $17.10bn over the same months last year, showing an increase of 5.36pc.

In the first nine months (July-March) of 2012-13, export of textile and clothing witnessed a growth of 7.09pc this year as it stood at $9.630bn from $8.993bn over the corresponding period of last year.

A sector-wise analysis showed that export of low value-added products, such as cotton yarn, was up by 29.17pc, cotton cloth 11.56pc, made-up articles 6.31pc and other textile material 44.83pc in nine months this year over same months last year. Export of knitwear increased by 2.94pc, bed-wear 0.09pc, towels 18.11pc, in July-March this year over the same months last year. Statistics shows that export of raw cotton declined by 65.03pc, and art, silk and synthetic textile by 25.33pc in the first nine months this year over last year.

Industry sources said that consistent supply of gas during the period under review to textile sector produced the desired results. The growth in yarn and fabric exports was mainly because of improved energy supply. The full capacity utilisation of production caused growth in export of home textile — towels and bed-wear as well.

This shows that in case of uninterrupted supply of energy, export of textile products would increase manifold.

Contrary to this, over 16pc increase was also witnessed due to rupee depreciation against the dollar in the past few months.

Exports to US surge by 49pc   [ top ]

DAWN, Mubarak Zeb Khan, April 18, 2013
ISLAMABAD, April 17: Pakistan’s export to United States surged by 49 per cent in the year 2012 from a year ago under the duty free Generalised System of Preferences (GSP) programme.

The US GSP provides duty free access to 3,500 products from Pakistan and 127 other countries. The total import value of US GSP was $19.9 billion in the year 2012.

But the share of Pakistan’s in US total GSP imports is $129 million during the year under review, which is still much below the potential to avail the facility.

During a seminar for members of Pakistani business community, senior officials from the Office of the US Trade Representative (USTR) here on Wednesday explained how Pakistani exporters can further take advantage of duty-free access to America.

Deputy Assistant Trade Representative Bill Jackson through a live video conference told participants at Islamabad Chamber of Commerce and Industry that Pakistan can grow its duty-free exports to the United States even more. Pakistan exported $3.6bn worth of goods to the United States in 2012, yet only 5.7pc of that amount took advantage of the duty-free treatment available under the GSP Program.

USTR identified all GSP-eligible products and highlighted how Pakistani exporters who are actively looking for potential US buyers can use GSP to increase their exports to the United States.

The major items that can be exported to US market duty free include jewelry, many agriculture precuts, chemicals, minerals, marble and carpets. However, the facility was not extended to most textiles and apparel, watches, footwear, handbags, luggage, some gloves and leather goods.

Pakistan therefore has the opportunity to expand its exports to the United States substantially under GSP.” Citing an example of how Pakistani exporters can enhance sales to the US under GSP, Jackson noted that Pakistani exports of gemstones, precious metals, and jewellery to the United States showed impressive growth of 300pc in 2012 – totalling $32.4m – following a previous training session that raised awareness about available market access.

Pakistan’s top GSP exports to US in 2012 also include plastics in primary forms and semi-finished and finished products worth $29.8m, followed by $21.1m sugar and sugar confectionery; $19.7m tool and cutlery made of base metals; $13.1m textile articles, used textiles and rags and $10.1m leather goods.

Jackson advised Pakistani exporters of GSP-eligible products that there are several ways to make the most of the available tariff advantage.

The GSP eligible textiles and apparel include silk fabrics and apparel including dresses, women’s suits, scarves; hand-loomed cotton fabrics, many types of gloves and mittens, national flags, and hand-loomed and hand-hooked carpets.

“First, consider using GSP as a marketing tool with U.S buyers. US importers may be willing to buy new products from Pakistan or buy more of a particular product if they know that the item is eligible for duty-free treatment under GSP. Many US importers are also unaware that a product may be eligible. As a result, they often pay duties on these products even when they don’t need to do so,” he emphasised.

In 2012, unnecessary duties were paid on GSP-eligible products from Pakistan, such as leather sports gloves, mittens, and mitts; certain non-cotton pillows, cushions, and similar furnishings, he explained.

Pakistani exporters in major business hubs including Karachi, Islamabad, Gujrat, Peshawar, Faisalabad, and Sialkot attended this live video-conference presentation by USTR at the Trade Development Authority of Pakistan in Karachi and at many chambers of commerce and industry across Pakistan.

Parvaiz Ishfaq Rana from Karachi adds: Pakistan could increase duty free imports into the US by using GSP as a marketing tool and also ensure that its treatment is claimed.

This was the advice given by US trade experts during a meeting held at the Trade Development Authority of Pakistan (TDAP) here on Wednesday.

The meeting was attended by economic officer US Consulate General, Karachi Kara Babrowski and economic specialist Fahd Zaidi while TDAP was represented by its chief executive Abid Javed Akbar and director investment Shahida Qasir. The meeting was also attended by a large number of exporters.

The experts said that US imports from Pakistan stands at around $3.6bn which includes imports of $195m made through GSP which stands 5pc of total imports.

There is an urgent need to diversify exports from Pakistan by capturing new trade opportunities for creating jobs. Around 3,500 different products from Pakistan are eligible to enter the US duty-free under the GSP programme.

Textile industry braces for criticism at today’s meeting   [ top ]

EXPRESS TRIBUNE, Zafar Bhutta, April 19, 2013
ISLAMABAD: Textile industrialists may come under scathing attack at a high-level meeting called in Lahore on Saturday (today) to discuss the captive power scam being investigated by the National Accountability Bureau (NAB).

Caretaker Petroleum Minister Suhail Wajahat Siddiqui will chair the meeting, which will be attended by all stakeholders, sources say.

In recent days, NAB has lashed out at government officials for supplying gas to inefficient captive power plants of textile manufacturing units at subsidised rates, which in turn sold electricity to the government at higher rates.

The petroleum ministry working under the previous government, on the insistence of the textile industry, had eased energy efficiency requirements for captive power plants and natural gas boilers.

This government also changed the priority list for gas supply to different sectors. Captive power plants, which were at fourth position according to a decision of the Economic Coordination Committee (ECC), were brought to third before the end of government’s tenure.

According to sources, some directors of Sui Northern Gas Pipelines are also exerting pressure on the caretaker government to provide gas in line with the gas allocation policy approved by the previous government, which put fertiliser plants at number three in the priority list.

Though the power sector is on second position, it is not getting gas supply. Even new plants with over 50% efficiency, such as Saif, Orient and Halmore having capacity of 900 megawatts, remain either closed or run on high speed diesel to produce expensive power because of shortage of gas, an official of the water and power ministry said.

The gas allocation policy was being violated as power plants were not being provided gas in line with the priority order, he said.