Latest news with #ExportFinanceScheme
Business Recorder
19-06-2025
- Business
- Business Recorder
KCCI delegation visits KPT
KARACHI: A high level, 35-member delegation of KCCI led by Chairman KCCI Zubair Motiwala and President KCCI M Javed Bilwani visited Karachi Port Trust (KPT) on the invitation of the KPT Board of Trustees with a strategic aim of boosting national trade. A briefing on facilities available at KPT was given in connection with the Export Finance Scheme initiative of KCCI and thereafter avenues of boosting national trade with efficient port operations and infrastructure development initiatives pursued by KPT came under discussion during the meeting. Copyright Business Recorder, 2025
Business Recorder
05-06-2025
- Business
- Business Recorder
PBF urges govt to exempt local cotton, seed, yarn, fabrics from 18pc GST
LAHORE: The Pakistan Business Forum (PBF) has called on the federal government to exempt local Cotton, yarn, Fabrics, Oil cake, seed cotton and oil from the 18% General Sales Tax (GST) in the upcoming Federal Budget 2025–26, warning that the failure to do so could push the country's Agriculture and textile industry toward total collapse. PBF Chairman South Punjab, Malik Talat Suhail while talking to media emphasized that the Export Finance Scheme (EFS), introduced to phase out subsidies and promote exports, has instead proven detrimental to the textile sector. Under EFS, imported raw materials are exempted from both sales tax and customs duty, while local inputs continue to be taxed at 18%. Though this tax is technically refundable, in practice, only 60–70% of refunds are released. The refund process is plagued by delays, manual processing, and high costs—issues that disproportionately harm small and medium-sized enterprises (SMEs). This imbalance has led many exporters to favour imported inputs, causing serious damage to local suppliers. As a result, Pakistan's import of cotton, yarn, and fabric surged by $1.5 billion in FY 2025, climbing from $2.19 billion to $3.64 billion. In contrast, textile exports rose by only $1.4 billion and net textile exports are projected to decline from $14.0 billion to $13.6 billion. Over 120 spinning mills and more than 800 ginning factories have shut down, while protests from loom workers in Faisalabad are growing. SMEs are particularly vulnerable, as they face multiple tax payments at every stage of production and have limited access to cheaper imported alternatives, unlike larger firms. The current situation has placed severe pressure on the country's foreign exchange reserves, especially as the number of commercial import licenses has tripled from 800 to 2,400. Meanwhile, local cotton production has fallen to a historic low of just 5 million bales, with further declines anticipated. Due to a lack of government support and declining demand, many farmers are abandoning cotton cultivation in favour of more water-intensive crops, placing further stress on national water resources. PBF also warned that the collapse of the cotton economy is stripping rural areas of $2-3 billion in income, with women cotton-pickers among the hardest hit. 'Pakistan is currently the only country imposing an 18% sales tax on cottonseed and cotton feed, driving farmer income below the cost of production and hitting the poorest segments of society the hardest'. Rising unemployment and declining rural earnings are further exacerbating the economic crisis. PBF South Punjab Chief has urged the government to immediately delist cotton, yarn, and fabric from the current EFS policy. He further stated that maintaining GST on local cotton while exempting imports under EFS is effectively a 'Pakistan-unfriendly policy'. It undermines local production, weakens the economy, and benefits only opportunistic importers. Without urgent reforms, the country risks facing a deepening economic crisis driven by misguided policy decisions. Copyright Business Recorder, 2025
Business Recorder
05-06-2025
- Business
- Business Recorder
PBF seeks 18pc GST exemption on yarn, fabric
KARACHI: The Pakistan Business Forum (PBF) has called on the federal government to exempt yarn and fabric from the 18% General Sales Tax (GST) in the coming Federal Budget 2025–26, warning that the failure to do so could push the country's textile industry toward total collapse. PBF Chairman South Punjab, Malik Talat Suhail emphasised that the Export Finance Scheme (EFS), introduced to phase out subsidies and promote exports, has instead proven detrimental to the textile sector. Under EFS, imported raw materials are exempted from both sales tax and customs duty, while local inputs continue to be taxed at 18%. Though this tax is technically refundable, in practice, only 60–70% of refunds are released. The refund process is plagued by delays, manual processing, and high costs—issues that disproportionately harm small and medium-sized enterprises (SMEs). This imbalance has led many exporters to favor imported inputs, causing serious damage to local suppliers. As a result, Pakistan's import of cotton, yarn, and greige fabric surged by $1.5 billion in FY 2025, climbing from $2.19 billion to $3.64 billion. In contrast, textile exports rose by only $1.4 billion, and net textile exports are projected to decline from $14.0 billion to $13.6 billion. Over 120 spinning mills and more than 800 ginning factories have shut down, while protests from loom workers in Faisalabad are growing. SMEs are particularly vulnerable, as they face multiple tax payments at every stage of production and have limited access to cheaper imported alternatives, unlike larger firms. The current situation has placed severe pressure on the country's foreign exchange reserves, especially as the number of commercial import licenses has tripled—from 800 to 2,400. Meanwhile, local cotton production has fallen to a historic low of just 5 million bales, with further declines anticipated. Due to a lack of government support and declining demand, many farmers are abandoning cotton cultivation in favor of more water-intensive crops, placing further stress on national water resources. The PBF also warned that the collapse of the cotton economy is stripping rural areas of $2–3 billion in income, with women cotton-pickers among the hardest hit. 'Pakistan is currently the only country imposing an 18% sales tax on cottonseed and cotton feed, driving farmer income below the cost of production and hitting the poorest segments of society the hardest.' Rising unemployment and declining rural earnings are further exacerbating the economic crisis. The Forum stressed that if current policies are not revised, Pakistan could lose $4–6 billion in potential foreign exchange earnings. Instead, the country continues to rely on expensive foreign loans to cover rising import costs, worsening the trade deficit, unemployment, and tax collection shortfalls. International partners have also taken notice. The United States has signaled that, unless Pakistan addresses its trade imbalance, it may impose a 29% tariff on all Pakistani exports. Though the US has offered to export up to 1.5 million bales of cotton and has invited a Pakistani trade delegation for discussions, the crumbling of local spinning capacity raises the critical question: who will consume the cotton if domestic mills shut down? The PBF South Punjab chief has urged the government to immediately delist cotton, yarn, and fabric from the current EFS policy. He further stated that maintaining GST on local cotton while exempting imports under the EFS is effectively a 'Pakistan-unfriendly policy'. It undermined local production, weakens the economy, and benefits only opportunistic importers. Without urgent reforms, the country risks facing a deepening economic crisis driven by misguided policy decisions. Copyright Business Recorder, 2025
Business Recorder
22-05-2025
- Business
- Business Recorder
‘EFS scheme a must for export-led growth, trade balance improvement'
KARACHI: President Karachi Chamber of Commerce & Industry (KCCI) Jawed Bilwani, while highlighting the crucial role played by the Export Finance Scheme (EFS) in sustaining Pakistan's exports said the EFS scheme is imperative to ensure continued export-led growth and trade balance improvement. He emphasised that the said scheme must continue in its original status and position prior to Federal Budget 2025-26 with reinstatement of local purchases under Section 880 (1)(b) of SRO 957(I)/2021 for acquisition of input goods (to allow local input goods liable to sales tax shall be supplied against zero-rated invoices) to ensure liquidity, competitiveness, and formalisation across the entire value chain as already recommended by the inter-ministerial committee headed by the federal minister for planning constituted by the prime minister. 'Despite contending with the highest regional costs of electricity, gas, water, and interest rates, Pakistan's exports have shown remarkable resilience, a feat largely attributable to the support provided by the EFS. Preserving and enhancing this scheme is essential for maintaining our export competitiveness,' he added. He highlighted the EFS was strategically developed through broad-based consultation with stakeholders to simplify and streamline export procedures, enabling a more progressive and accessible export environment. It consolidated all previous schemes under one umbrella, minimized documentation requirements, and facilitated ease of doing business through a fully automated system integrated with WeBOC and Pakistan Single Window (PSW). The scheme included real-time audits and end-to-end traceability to regulate compliance costs and ensure transparency. Bilwani added the EFS has played a crucial role in easing liquidity pressures for exporters, particularly in the value-added textile and apparel sector, where access to input goods is vital for sustaining production and delivery timelines. The import of specialized yarns and fabrics under EFS has been particularly instrumental in enabling exporters to meet international quality standards. 'Much of the quality yarn and fabric used by Pakistan's apparel exporters is not produced domestically, and the local alternatives, where available, are often of lower quality and higher cost,' Bilwani explained. 'The garments manufacturers using imported yarn are of superior quality, giving our exporters a competitive edge in global markets.' The value-added apparel sector, he noted, achieves up to 70 percent value addition on export goods and requires uninterrupted access to high-quality raw materials. 'Countries like Bangladesh and Vietnam are completely reliant on imported raw materials for their export-oriented textile sectors, and their success is proof of the effectiveness of such models when supported by robust facilitation mechanisms,' he added. President Bilwani warned, however, that policy changes announced in the last federal budget, particularly the removal of zero-rating for local supplies, have disrupted the balance between imported and local raw materials. 'Currently, while imported raw materials are tax-exempt, local inputs are subject to an 18% sales tax with delayed and costly refunds,' he said. 'This creates a structural imbalance, discouraging local sourcing and impacting domestic SMEs across the value chain.' In view of the IMF's reservations about restoring full zero-rating, Bilwani proposed a pragmatic middle path, such as adopting a negative list to restrict high-risk imports under EFS, while preserving the broader scheme's facilitative framework. To further strengthen EFS, Bilwani reiterated the proposal for real-time audits and digital monitoring to reduce processing delays, enhance transparency, and ensure the scheme's credibility. 'If implemented effectively, the EFS has the potential to become a strategic pillar in eliminating Pakistan's trade deficit and ensuring long-term export sustainability,' he concluded. Copyright Business Recorder, 2025
Express Tribune
22-05-2025
- Business
- Express Tribune
Businessmen demand EFS restoration in original form
Listen to article Karachi Chamber of Commerce and Industry (KCCI) President Jawed Bilwani, while highlighting the crucial role played by the Export Finance Scheme (EFS) in sustaining Pakistan's exports, emphasised that the scheme must continue in its original status and position, which was before the presentation of federal budget for fiscal year 2024-25. In a statement, he called for allowing local purchases under Section 880 (1)(b) of SRO 957(I)/2021 (local input goods liable to sales tax to be supplied against zero-rated invoices) to ensure liquidity, competitiveness and formalisation across the entire value chain, as recommended by the Inter-Ministerial Committee. "The EFS is critical to ensuring continued export-led growth and trade balance improvement," he said. "Despite facing the highest regional costs of electricity, gas, water and interest rates, Pakistan's exports have shown remarkable resilience, a feat largely attributable to the support provided by the EFS. Preserving and expanding this scheme is essential for maintaining export competitiveness." Bilwani highlighted that the EFS was strategically developed by consolidating all previous schemes under one umbrella, which minimised documentation requirements and facilitated ease of doing business through a fully automated system integrated with Web-based One Customs (WeBOC) and the Pakistan Single Window (PSW). "Much of the quality yarn and fabric used by Pakistan's apparel exporters is not produced domestically and the local alternatives, where available, are often of lower quality and higher cost," he pointed out. "The imported yarn used by garment manufacturers is of superior quality, giving exporters a competitive edge in global markets." The value-added apparel sector makes up to 70% value addition to export goods and requires uninterrupted access to high-quality raw material. "Countries like Bangladesh and Vietnam are completely reliant on imported raw material for their export-oriented textile sectors and their success is a proof of effectiveness of such models when supported by robust facilitation mechanisms," he said. Bilwani warned that policy changes announced in the last federal budget, particularly the removal of zero-rating for local supplies, disrupted the balance between imported and local raw material. "Currently, while the imported raw material is exempt from taxes, local inputs are subject to 18% sales tax with delayed and costly refunds," he said. "This creates a structural imbalance, discouraging local sourcing and impacting SMEs across the value chain." In view of the IMF's reservations about fully restoring the zero-rating facility, he proposed a pragmatic middle path such as adopting a negative list to restrict high-risk imports under the EFS while preserving the broader scheme's facilitative framework.
