KARACHI: President, Pakistan Businesses Forum (PBF) Sahibzada Muhammad Usman Zulfiqar has demanded setting up of five mega textiles parks be proposed in the budget 2021-22, saying this will make the industry globally competitive.
In the budget proposals shared with presser on Tuesday, he said in the last year finance bill, textile industry was completely ignored and deprived of relief.
“There must be consistency in the policies and no way backs for quite some times for the long run growth and development while overnight shift in policies has also ways been disadvantageous,” he remarked.
He said Pakistan has a continuing balance of payments crisis and is being financed by local and international borrowing. More debt piling or borrowing is not a feasible solution. Therefore, this challenge can be overcome only by increasing exports, he stressed.
PBF President further said the government through Finance Act 2013 had raised the general rate of minimum turnover tax under Section 113 of the Income Tax Ordinance 2001 to 1% from 0.5%, which was further increased to 1.5% through Finance Act, 2019 and we proposed the minimum turnover tax should be abolished for the coming year. Indirect exporters may also be extended taxation regime available to direct exporters.
As for as Corporate Tax Rate is concerned, the current corporate tax rate is 29% in Pakistan whereas in Sri Lanka, Bangladesh and Vietnam it is 28%, 25% and 20% respectively. PBF suggested that this rate should be brought down to 25%.
Similarly government could make it compulsory for the large spinning units having more than 30,000 spindles to grow their own cotton to manufacture cotton yarn and extend full support to them because country textile exports could not be enhanced without increasing the area under cotton cultivation and yield.
PBF also suggested by introducing favourable slap on Duty and Tax Remission for Export (DTRE) and Regulatory duty (RD) against raw material be included in the budget; and also abolished the mechanism of export refunds with the replacement of fix taxation against bill of lading without disturbing the General Sales Tax on back end.
For the increment of exports, the availability of credit and soft loaning facilities at the rate not more than 4 to 5 percent of policy rate may be announced in finance bill.
In this regard, SBP may direct the commercial banks for 20% disbursements may be for export oriented industries and approval of the loan amount could be directly credit to vendor or opening for any letter of credit (L/C) to purchase machinery etc.; so that loaning facility may utilize correctly and if any bank failed to do the due disbursement then they have to face penalties from the regulator. Usman added.