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News Clips 04 July, 2015

[ Government increases cost of business by 12 percent: APTMA ]
[ Power consumption: two textile units' zero- rating facility withdrawn ]
[ Premier urged to take stock of situation: 30 percent voluntary closure of mills reported: APTMA chief ]
[ Makers of 52 items bound to give FBR production data ]
[ PTEA asks govt to revive textile sector ]
[ Marketing, capacity-building of garment technology institutes: JICA to provide technical assistance to Textile Ministry ]
[ No minister for four months: Government paying little or no attention to Textile Sector ]

Government increases cost of business by 12 percent: APTMA   [ top ]

Business Recorder, July 4, 2015
All Pakistan Textile Mills Association has accused the government by burdening taxes and shifting the recovery and line losses of electricity to it. Increasing the cost of business in textile industry by 12 percent is a fast turnover, the association said, "The recovery losses of power sector distribution companies are 13 percent and the line losses are 6 percent. The government has burdened the industry by Rs 2.5 per unit and shifted the burden of 50 paisas per unit against the interest paid on loan it got from banks to pay Rs 480billion circular debt. 

Power consumption: two textile units' zero- rating facility withdrawn   [ top ]

Business Recorder, July 3, 2015
The Federal Board of Revenue (FBR) has decided to charge sales tax on supply of electricity to two textile units by withdrawing sales tax zero-rating facility. In this regard, the FBR has issued two sales tax general orders here on Thursday. 

According to the STGO 103 of 2015, the FBR has made amendment in STGO 07/2007 dated 13-09-2007- withdrawal facility of zero-rating on supply of electricity. 

The STGO said that the sales tax to be charged on electricity and gas bills of A K Fashion Apparel Industries due to the reasons that zero rating facilities are misused. Sales tax would be charged on electricity supplied to NS Embroidery, reason being that the taxpayer has shifted to other premises. 

Premier urged to take stock of situation: 30 percent voluntary closure of mills reported: APTMA chief   [ top ]

Business Recorder, July 3, 2015
The All Pakistan Textile Mills Association Chairman has claimed that his association has received the report of a 30-percent voluntary closure of textile mills across the country. 

APTMA Chairman SM Tanveer, talking to a select group of journalists at the office of group leader Gohar Ejaz about early this week's emergent meeting, where member mills had decided to halt them voluntarily, complained that the government had failed to bring the un-organised power looms and sizing sectors into the tax net and burdened the textile industry with a 0.6-percent tax on each transaction plus a five-percent sales tax ... All these incidentals and punitive measures have hit the sustainability of the textile industry in Pakistan." 

He told the journalists, "It is also an irony that the federal government has imposed a surcharge of Rs 3.60 per unit to mitigate the positive impact of tariff reduction by the National Electric Power Regulatory Authority. The textile industry is unable to bear this burden despite operating on independent feeders with no line losses and theft and a 100-percent payment of bills." 

He went on, "Regional competitors are paying less than 10 cents against the 14.50-cent electricity tariff in Pakistan. Since the government is not ready to strengthen the viability of the textile industry by reducing the incidental taxes and the electricity tariff, it is the right time to lock up factory gates once and for all. The government should immediately declare the export industry zero rated and remove all surcharges, development cess and the sales tax." 

He then urged the premier to take stock of the situation and sit down with his association to resolve the issues. 

Group Leader Ejaz too was critical of the situation, saying scathingly, "Textile millers in Sindh and Khyber Pakhtunkha are blaming the Punjab for their ironies and the textile millers in the Punjab are crying against the discrimination. The association leadership has recently averted a move by certain millers for a nation-wide strike ... The industry is bearing a burden of Rs 175 billion, that is 12 percent of the turnover, in the shape of innovative taxes, energy tariff and a hostile attitude by the federal government towards the textile industry." And warned, "Time is not far when both ready-made garments and knitwear units will also collapse."

Makers of 52 items bound to give FBR production data   [ top ]

DAWN, July 3, 2015
ISLAMABAD: The Federal Board of Revenue (FBR) has bound manufacturers of 52 major items to declare actual monthly production data for determining sales tax. 

According to the SRO494 of 2015, the manufacturers will now have to file details of production data with the FBR. Several statutory regulatory orders (SROs) were issued on Thursday to give effect to procedural and other decisions in respect of various sectors. The 52 major commodities/items include sugar, tea, cigarettes, beverages, paper, board, chemicals, caustic soda, toilet soap, flakes and detergent, industrial gases, LPG, natural gas, ceramic tiles, cement, refrigerators, air conditioners, deep freezers, paints/varnishes, biscuit, all kinds of motor vehicles, juices, yarns, petroleum products, iron and steel products, pesticides, fertilisers, storage batteries and power transformers. 

Further amendments were made in Sales Tax (Special Procedures) Rules, 2007. Chapter 9 on processing of refund claims filed by the cotton ginners is proposed to be omitted, as it has become redundant since the ginned cotton is no more zero-rated. To rationalise the present concessionary regime of sales tax rates on the steel sector, the following measures are proposed: sales tax recovered through electricity bills from steel melters and re-rollers has been raised from Rs7 to Rs9 per unit; for ship-breakers, the rate is enhanced from Rs6,700 a tonne to Rs8,000 a tonne of ship plate. 

Other sales tax rates for melters and re-rollers using natural gas for their own generation or those paying sales tax on a mill size basis shall be enhanced proportionately. Adjustable sales tax on import at the rate of Rs5,600 a tonne of re-meltable scrap is to be continued at the same rate. 

The sales tax on local scrap of these PCT headings is also proposed to be subjected to the same rate of Rs5,600 a tonne. The import of compressor scrap, now classified under a new PCT heading, 7204.4940, is subjected to an un-adjustable sales tax at the rate of Rs5,600 a tonne. Wholesaler-cum-retailers falling under Chapter 13 are given waiver from provisions of section 73 of the Act and allowed to issue tax invoice in respect of specified goods subject to extra tax. 

The FBR will only grant sales tax exemption to any entitled organisation or agency under grants-in-aid, which would bring original exemption orders from Economic Affairs Division (EAD). The FBR has issued a new procedure for the organisation or agency under grants-in-Aid availing sales tax exemption through a notification issued on Thursday. 

Under the amended rules, any entitled organisation or agency that wants to make exempted import or taking exempted supply from a registered person shall make application to the officer of Inland Revenue having jurisdiction to issue exemption certificate to this effect, provided that the application shall be accompanied by an exemption order in original issued by EAD on the specified format. Through SRO485 of 2015, the companies, recipients of advertisement services and registered exporters are now required to deposit the amount of sales tax withheld/to be withheld by 15th of each month following the month in which purchases were made (accrual basis). Earlier, the withholding tax was to be deposited after payment to supplier. The amendments were made in sales tax special procedure (Withholding) Rules, 2007. 

Presently, withholding agents are required to deposit sales tax to be withheld by them along with the return for the tax period (month) in which they make payment for the purchases to their suppliers. On the other hand, they adjust input tax on such purchases immediately. It is provided that except for the government sector withholding agents, all other withholding agents should deposit the sales tax amount to be withheld along with the return for the tax period in which purchase is made. 

The petroleum dealers of HSD (high-speed diesel) and petrol are excluded from purview of withholding. Exclusion to products like mild steel products, paper in rollers or sheets, plastic products, including pipes, is withdrawn. However, people in the steel sector paying sales tax under special procedure, except those who pay sales tax ad valorem, shall continue to be excluded from provisions of withholding tax. 

Through another SRO491 of 2015, the minimum value of assessment of locally produced coal has been enhanced from Rs1,000 a tonne to Rs2,500.

An amendment was made in SRO550 of 2006, through SRO489 of 2015, under which the FBR excluded Federal Excise Duty (FED) on air travel service and carriage of goods by air service from sales tax mode. It means input tax adjustment against these services will not be available. 

In SRO1125 of 2011, concessionary rate of 2pc, 3pc and 5pc were applicable to five export-oriented sectors — textile, leather, carpet, surgical and sports goods. The rate of 2pc is being enhanced to 3pc. 

The said notification is also being revamped through another notification, SRO486 of 2015, and simplified without disturbing the existing provisions (except withdrawal of reduced rate on maize starch) to facilitate the registered persons as well as field officers. Value-addition tax on commercial imports of these sectors at the rate of 2pc is being reduced to 1pc. 

The FED SROs that were rescinded included SRO778 (I) 2006; SRO474 (I) 2009; SRO802 (I) 2009; and SRO81 (I) 2010. These SROs are now part of the schedule of the FED Act. 

The sales tax SROs which either have been transposed to the schedules of the Sales Tax Act, 1990 or are redundant included: SRO208 (I) 1998; SRO397 of 2001; SRO77 of 2004; SRO433 of 2005; SRO1007 of 2005; SRO69 of 2006; SRO313 of 2006; SRO880 of 2007; SRO76 of 2008; SRO408 of 2012; SRO460 of 2013; SRO657 of 2013; SRO572 of 2014; SRO84 of 2015. 

PTEA asks govt to revive textile sector   [ top ]

DAWN, July 3, 2015
LAHORE: The Pakistan Textile Exporters Associ¬ation (PTEA) on Thursday urged the government to help restore competitiveness of the textile industry. 

The association stressed the need for creating a friendlier environment as the country’s textile industry has lost its viability against regional competitors. 

“The major factor behind the declining trend is the erosion of textile industry’s competitiveness, particularly against the huge incentives being provided by competing countries to their export sectors,” said PTEA chairman Sohail Pasha. 

Comparing the results of Pakistan’s 2009-14 textile policy with India’s five year plan for 2007-12 , Pasha said the implementation of Pak¬istan’s first ever textile policy with an outlay of Rs188 billion achieved negligible growth in textile exports, an addition of 1 million spindles, no new jobs and dropping world market share from 2.2 per cent to 1.8pc. 

On the other hand, India’s five-year plan for 2007-12 with outlay of Rs140bn led to a 76pc increase in exports, an addition of 14m spindles, creation of 16m direct jobs and an increase in its global market share. 

PTEA’s group leader Ahmad Kamal was of the view that Pakistan’s textile exports were too close to Indian textile exports few years back but with 5pc industrial growth rate, their annual textile exports had crossed $33 billion. 

“Conducive and well-implemented policies have meant that competing economies like India have far surpassed Pakistan in terms of capacity and output in the textile sector.” 

Marketing, capacity-building of garment technology institutes: JICA to provide technical assistance to Textile Ministry   [ top ]

Business Recorder, July 1, 2015
Japan International Co-operation Agency (JICA) on Tuesday extended a helping hand to the ailing textile sector of Pakistan by showing willingness to provide technical assistance to the Ministry of Textile in marketing, products diversification and capacity building of garment technology institutes. 

Japan is the third largest textile importer with $50 billion annual import bill; however Pakistan share is about 0.26 percent, a senior official of the Textile Ministry told Business Recorder. Both sides would work on textile products diversification, especially those which has demand in Japan. This will help improve supply chain and increase Pakistan's textile exports to Japan, officials maintained. 

JICA and Textile Ministry signed a MoU here on Tuesday, through which the former would provide technical expertise to the Ministry for setting up marketing, and capacity building of garment technology institutes. The documents were signed by JICA team leader Takafumi Ueda and Secretary Textile Industry Amir M. Khan Marwat. According to the agreement, JICA would provide equipment, machinery, consultants and would develop new curriculum. At present, three project areas have been identified; one each at the Ministry of Textile Industry, the Faisalabad Garment City and Pakistan Knitwear Training Institute, Lahore. The project will be completed in four years, where Pakistan will provide only offices, while the rest of the investment would be carried by JICA.

The government has announced different initiatives in the textile policy (2014-19) ie vocational training of workers, internships and different programmes for the enhancement of skills and higher per capita productivity. A new vocational training programme will be launched through PSDP to train sufficient men and women, over the five year period, for skills required in the value added sector such as garments and made ups. The project will be completed in two phases while vocational training institutes as well as factory spaces will be utilised for the training purpose. 

The Ministry will carry out productivity analysis on processes and energy conservation. Trainings would be provided to improve per capita productivity on cost sharing basis. To attain international compliance in Occupational Health and Safety, trainings would also be provided to the SME sector in partnership with provincial governments, ILO and other agencies, especially for initiating Better Work Programme. The Government will provide necessary funds for productivity and OHS audits. In addition, Business Alliances and Buyers' Forums would be created to assist value-added sectors in meeting international standards of sourcing. 

No minister for four months: Government paying little or no attention to Textile Sector   [ top ]

Business Recorder, June 30, 2015
It seems that the government is least interested to improve textile sector in the face of gradual decline in exports, as there is no minister for the last four months, which is further accumulating the problems, official sources revealed. The ministry lacks co-ordination without the head to run its affairs. Senator Abbas Khan Afridi left as Minister on completion of his tenure as Senator in March but no new appointment has so far been made to fill the slot. Most of the important decisions regarding textile policy such as Export Development Fund (EDF) and energy crisis are hanging in the balance. 

The call by the All Pakistan Textile Mills Association (APTMA) to close down the textile is an alarm bell for the authorities concerned. According to the Pakistan Bureau of Statistics (PBS), country's textile exports for the month of May 2015 lowered by 2.85 percent year-on-year against May 2014. Provisional figures state in May 2015 exports amounted to Rs 198.851 billion as against Rs 202.874 billion in April 2015 and Rs 208.316 in May 2014, showing a decrease of 1.98 percent and 4.54 percent respectively. 

Total textile exports during the period were recorded at Rs 114.158 billion against Rs 117.50 compared to the corresponding period last year. With exception to readymade garments that recorded a growth of 32.72 percent, all other major textile exports declined during that period. Exports of knitwear declined by 8.43 percent, bed wear by 6.86 percent and towels by 6.28 percent in May 2015 against May 2014. Sources revealed that one reason behind the decline in textile exports is non-existence of full time minister of textile. Non-provision of gas and power load shedding, especially in Punjab was responsible for decrease in textile related products and its exports. 

However, the call by the All Pakistan Textile Mills Association (APTMA) to 'voluntarily' close down the textile industry because of the losses has increased the uneasiness of the ministry. According to sources APTMA has been assured by the ministry that issues would be raised with ministries concerned. 

Chairman APTMA S M Tanveer told Business Recorder it has been decided to 'voluntarily' close down the textile industry as the cost of doing-business in the textile sector has increased manifold and it is no more feasible. Due to energy crisis, the industry has already lost 30 percent capacity while the remaining would be closed after finishing the cotton in hands within one month. 

Tanveer said that the issues were raised with Commerce Minister Khurram Dastgir Khan and Textile Ministry officials. The industry has proposed zero rated status, uniform electricity rate at affordable price, addition of Ginning and Spinning sector in drawbacks on local taxes and levies.