Latest news with #PakistanReadymadeGarmentsManufacturersandExportersAssociation
Express Tribune
21-07-2025
- Business
- Express Tribune
Trade bodies advocate restoration of final tax regime
Trade bodies have expressed concern over the imposition of the normal tax regime under the Finance Act and proposed several measures to resolve their pressing problems. They have advocated that the final tax regime for the export sector should be reinstated and under this mechanism the tax rate can be increased gradually. They suggested tax rates of 1.5% for FY25, 1.75% for FY26 and 2% from FY27 onwards, adding that this approach would ensure the required increase in revenue without the need for complex tax filings or audits. A high-level delegation comprising representatives from the Sialkot Chamber of Commerce and Industry, Pakistan Readymade Garments Manufacturers and Exporters Association and Pakistan Hosiery Manufacturers Association met with Special Assistant to Prime Minister (SAPM) on Industries and Production Haroon Akhtar Khan on Monday. They discussed crucial matters including the final tax regime versus the normal tax regime, industrial policy and measures to improve the ease of doing business. A major worry was the emerging practice of tax officers, who were demanding an additional 0.5% advance tax from exporters to meet revenue targets. This raises the effective tax burden by 150%, a level that is utterly unsustainable for the value-added export sectors, especially those dominated by small and medium enterprises (SMEs), the representatives of trade bodies said. The final tax regime was introduced in fiscal year 1991-92 with a 0.5% fixed tax on exports. It was a remarkable success as tax collection rose from Rs343 million in 1990-91 (pre-final tax regime) to Rs855 million in 1991-92, reflecting a staggering 149% growth. They stressed that it not only boosted government revenue with minimal administrative cost but also paved the way for exponential growth in exports, particularly from regions like Sialkot, while significantly reducing corruption and discretionary interventions. Over the decades, the final tax regime provided exporters with a simple, transparent and harassment-free taxation model, but the imposition of the normal tax regime increased the burden, they said. The new policy allows a 2% deduction at source on export proceeds (a 100% increase), an unprecedented move that undermines export viability. They pointed out that there was 1% minimum tax and 1% advance tax (total 2%) at source, and 29% tax on companies and 45% on individuals/Association of Persons (AOPs) after assessment. The trade representatives also raised the issue of 10% surcharge on income exceeding Rs10 million for AOPs/individuals and super tax of 1-10% for income exceeding Rs150 million. They were of the view that the shift to the normal tax regime would have significant implications with the potential for unfair practices. The introduction of refunds and complex tax assessments may incentivise exporters to manipulate financial statements to maximise refunds. The normal tax regime could also reduce the inflow of export proceeds as businesses may seek to avoid higher tax burdens by resorting to under-invoicing. Exporters may deliberately declare lower values for goods or services to reduce the taxable income, leading to minimum tax liabilities and parking of funds abroad. Addressing the concerns, SAPM Haroon Akhtar assured the delegation that the government was fully aware of the challenges faced by the business community. "We are committed to taking all possible measures to resolve these issues," he stated. He revealed that a proposal would be drawn up to include a comprehensive and standardised definition of SMEs in the new industrial policy. "A stable and predictable policy framework is essential for attracting investment and ensuring sustainable industrial growth," the PM aide remarked.
Express Tribune
18-06-2025
- Business
- Express Tribune
PM asked to save value-added sector
A man selects a dress for his child at a shop in the Saddar area of Karachi. Tailors claim they are losing business to readymade garments manufacturers. Photo: Jalal Qureshi/Express Listen to article Pakistan's $11 billion export-oriented value-added industry, which contributes nearly one-third of total exports, has issued a strong SOS appeal to Prime Minister Shehbaz Sharif, saying that recent budgetary measures are set to derail export-focused sectors at a critical time. In a joint statement, Pakistan Readymade Garments Manufacturers and Exporters Association, Pakistan Hosiery Manufacturers Association, the Surgical Instruments Manufacturers Association, Sialkot Chamber of Commerce and others demanded the immediate revival of the Final Tax Regime and restoration of the Export Facilitation Scheme (EFS) in its original structure. They expressed concern that despite the government's slogan of export-led growth, the reality on the ground was entirely the opposite. "The government always talks about promoting exports, but in practice, no department seems to be on board." They pointed out that in the budget speech, the finance minister uttered the word "export" only once and that too in a negative context in order to impose duty on imported yarn under the EFS. Addressing the prime minister, the joint statement said, "We urge you to intervene immediately and convene an emergency meeting with leading export associations before this budget is passed. If this situation persists, Pakistan's most reliable foreign exchange earning sector will suffer irreparable damage." In such a policy environment, they cautioned, the government's vision of taking exports to $100 billion under Uraan Pakistan was simply not possible. Industry leaders categorically said that they were not asking for subsidies, exemptions or special treatment, but just wanted a level playing field to compete globally. International buyers are actively seeking long-term clarity and stability in the EFS framework as Pakistan has a chance to attract businesses being diverted from China. The Final Tax Regime has been replaced by complex procedures, audits and refund hurdles.
Business Recorder
07-06-2025
- Business
- Business Recorder
PRGMEA seeks targeted policy support in budget
KARACHI: In an urgent appeal to the government, the Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) has called for targeted policy support in the upcoming budget to address pressing challenges facing the country's value-added textile export sector. The association also urged the full and proper restoration of the Export Facilitation Scheme (EFS) and the Final Tax Regime (FTR). Representing a $4.9 billion export segment, the Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) has submitted a detailed communication to Prime Minister Shehbaz Sharif and Haroon Akhtar Khan, Special Assistant to the Prime Minister on Industries and Production. In the letter, on behalf of PRGMEA, former Chairman Ijaz A Khokhar has highlighted six critical areas requiring urgent intervention: reinstatement of the EFS, restoration of the FTR, engagement on high US tariffs, clearance of refund backlogs, preparedness for the GSP+ review, and the launch of a national branding campaign to promote 'Made in Pakistan' garments. $60bn exports by 2029 target unachievable: MoC Khokhar also outlined a set of strategic policy recommendations aimed at restoring the sector's competitiveness, streamlining tax and refund mechanisms, and positioning Pakistan to benefit from evolving global trade trends He warned that without timely and targeted reforms, Pakistan risks losing its competitive edge at a time when global apparel buyers are diversifying away from traditional sourcing hubs, presenting a rare opportunity for local exporters. He has emphasized that continuity in policy, lower costs of doing business, and SME-focused facilitation is essential to unlocking the sector's true potential and advancing the Prime Minister's vision of achieving $100 billion in exports. PRGMEA urged the government to fully restore the original EFS framework, ensuring it remains a practical and enabling tool for the exporters. The recent changes in this scheme are highly restrictive and counterproductive, particularly for SMEs operating under Just-in-Time (JIT) and Never Out of Stock (NOS) export business models that require longer lead times and flexible inventory management, he added. Moreover, he suggested that any addition of sales tax within the EFS framework must be avoided, as it risks double taxation and imposes unnecessary financial and administrative burdens on exporters. Khokhar said that the demand by a sub-sector to exclude fabric and yarn from the EFS is not justified, particularly when it comes to technical and functional materials that are not produced locally as per international standards. In many cases, exporters are obligated to source specific fabrics or yarns from buyer-nominated suppliers to meet international quality and compliance standards, he mentioned. Restricting such imports under EFS would severely impact the competitiveness and operational viability of Pakistan's value-added apparel exporters. PRGMEA recommends that the EFS be reinstated in its original true letter and spirit, so that Pakistan's value-added textile industry can operate competitively, reliably, and sustainably in the global market. PRGMEA has urged the government to restore the FTR to simplify tax compliance, eliminate redundant audits, and improve the overall ease of doing business particularly for SMEs. PRGMEA recommends that the government, immediately engage US trade authorities to review the reciprocal tariff and advocate for GSP-like tariff relief or ESG-linked concessions for sustainably produced garments. Khokhar has strongly urged the government to implement a fully automated, time-bound refund mechanism to ensure uninterrupted cash flow for exporters as delays in the disbursement of sales tax refunds and customs rebates continue to create severe liquidity constraints, particularly for SMEs operating on tight margins. To expand Pakistan's global footprint, Khokhar has urged the Ministry of Commerce to launch a robust marketing and branding campaign for 'Made in Pakistan' garments. Trade fairs, B2B matchmaking, and digital outreach through embassies should be part of this drive, he added. Without concrete reforms, policy continuity, and timely facilitation, the true potential of this sector and its contribution toward national export targets will remain unrealized, he concluded. Copyright Business Recorder, 2025
Business Recorder
02-06-2025
- Business
- Business Recorder
Trade barriers and cooling supply chains: Apparel sector warns of setbacks
LAHORE: Seeking an urgent meeting with Prime Minister Shehbaz Sharif ahead of the federal budget, Pakistan's apparel sector; a vital contributor of over $9 billion in export revenue has warned that the country's value-added textile industry faces serious setbacks due to continued tariff barriers and restrictive policies that are choking supply chains. In a joint statement issued by the Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) and the Pakistan Hosiery Manufacturers & Exporters Association (PHMA), apparel exporters stressed that global buyers now demand certified, high-performance materials that are simply not available in Pakistan. Yet, import of such essential raw materials remains hindered by duties and outdated regulations. PRGMEA Regional Chairman Dr. Ayyazuddin and PHMA Zonal Chairman Abdul Hameed jointly demanded a direct and an immediate meeting with the prime minister ahead of the budget, warning that without urgent intervention, Pakistan could lose out on the global shift in sourcing patterns that has opened fresh opportunities for new exporters. Dr. Ayyazuddin emphasized that Pakistan still relies heavily on cotton-based exports — primarily denim and fleece — while nearly 80% of global apparel trade has moved toward synthetic and functional textiles. 'We cannot expand or diversify if we don't have access to the right raw materials,' the statement said. 'We are being penalized for importing items that aren't even produced locally.' Abdul Hameed pointed out that man-made fibers, technical yarns, performance fabrics, and critical trims — many categorized under HS Chapters 54, 55, and 96 — are subject to duties despite not being manufactured in the country. 'Keeping tariffs on non-available raw materials is equivalent to taxing exports before they even happen,' he said. Former PRGMEA chairmen Ijaz Khokhar and Sajid Saleem Minhas backing the joint demand highlighted that SMEs are particularly vulnerable due to rigid policies and lack of flexibility in global compliance. 'We've sent a detailed letter to the Prime Minister Shehbaz Sharif and commerce ministry outlining how certain recent policy changes, like the shortening of the Export Facilitation Scheme (EFS) input period from 60 to just 9 months, are unrealistic for the apparel sector,' he said. PRGMEA ex-chairmen Ijaz Khokhar added that the letter, addressed to the PM as well as the Commerce Minister Jam Kamal, strongly criticizes the abrupt shift in EFS timelines. He argued that value-added exporters often operate under just-in-time and never-out-of-stock business models, requiring longer input cycles to fulfil diverse orders. He said that the current restrictions, it warns, will disrupt operations and increase compliance burdens for exporters. Sajid Saleem Minhas added that the local spinning industry has not evolved to meet the requirements of today's global fashion market. Since we don't produce the materials our buyers demand, we should at least allow their duty-free import. Otherwise, we are locking ourselves out of high-growth product categories, he said. The PRGMEA and PHMA members also called for restoration of the Final Tax Regime (FTR) for exporters, stating that the shift to the Normal Tax Regime has led to complex audits and disrupted business continuity. We need simplicity and certainty, not additional paperwork and scrutiny,' the statement noted. Ijaz Khokhar also raised another concern which is the lack of government push on trade diplomacy, particularly with the United States, where Pakistani textiles face an average import tariff of 29%, compared to lower rates for competitors like Bangladesh and Vietnam. The letter suggests Pakistan negotiate preferential terms or targeted tariff relief with the U.S., especially for eco-friendly and sustainable products that align with global ESG compliance. He said that refund delays were also highlighted as a chronic problem. Exporters are facing severe liquidity shortages due to delayed disbursement of DLTL, DDT, sales tax, and withholding tax refunds. The industry has requested an automated and time-bound mechanism for refund processing to ease working capital constraints. Additionally, both associations emphasized the need for a strong national marketing campaign for 'Made in Pakistan' garments. They urged the Ministry of Commerce to initiate global trade outreach through embassies, digital platforms, and targeted B2B events to increase visibility and improve brand image. He said that this sector has the potential to double its exports in five years and added that we need the government to first remove these structural roadblocks. Sajid Minhas said that the Pakistan's value-added textile sector is one of the largest employers and a key contributor to national exports. The country cannot afford to lose this opportunity. We request the prime minister to meet us urgently and help align policy with global market realities. Copyright Business Recorder, 2025
Express Tribune
28-05-2025
- Business
- Express Tribune
Textile exporters sound alarm over tax, energy policies
Pakistan's leading garment and textile exporters have sounded alarm over the government's policies that they fear will cripple the vital export sectors, which will in turn lose a crucial opportunity to capture a larger pie of the global market. The Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) has vehemently opposed any move to impose 18% sales tax on exporters operating under the Export Facilitation Scheme (EFS). It warned that such a regressive tax measure would paralyse the garment export sector, stifle the essential cash flow and derail the chance for Pakistan to increase its presence in the global apparel market. The association expressed concern over what it described as a deliberate campaign by vested interests within the textile sector to weaken the country's most dynamic and value-added industry. PRGMEA Regional Chairman Dr Ayyazuddin stated that the EFS was not a luxury but a necessity for export-led growth, adding that the garment industry, being entirely export-oriented and positioned at the end of textile value chain, was already bearing the brunt of delayed refunds and multiple taxes. "Exporters pay sales tax upfront and wait for months to receive refunds; they often face a three-month delay, which severely hampers their cash flow and operational capacity," Ayyazuddin elaborated. He stressed that the imposition of additional taxes would prove disastrous as the garment industry was playing a critical role as Pakistan's biggest source of employment and foreign exchange, particularly at a time when global trade shifts were offering new opportunities. He warned that any restriction or levy on imported inputs, which are essential as 79% of the global textile market uses synthetic filament yarn, would push international buyers to divert orders to Pakistan's competitors like Bangladesh, Vietnam or Cambodia. Simultaneously, the Pakistan Hosiery Manufacturers Association (PHMA) called on the government to abolish the outdated peak and off-peak electricity tariff structure. In a letter sent to top government officials, the PHMA highlighted that the peak-hour surcharge policy was introduced to curb consumption during critical power shortages. However, the energy scenario has changed significantly, with Pakistan now having a surplus generation capacity and even exploring electricity exports. Under such circumstances, the PHMA argued, the rationale for maintaining peak and off-peak tariff differential has completely vanished. PHMA Zonal Chairman Abdul Hameed noted that exporters in the hosiery and textile sector, operating 24/7 to meet global deadlines, were struggling with competitiveness challenges due to high electricity charges during peak hours. Fluctuating tariffs force industries to change production schedules, reducing efficiency and increasing overall costs, which weakens Pakistan's position internationally. Hameed emphasised that the surplus power situation presents a clear opportunity for reform.
