Withdrawal of the zero rated facility from October 01, 2010 will result in massive closures of the export-

oriented industry, like weaving, processing, printing, hosiery and textile made up manufacturing units,
cautioned the leaders of value-added textile sector.

Issues such as excessive cotton and yarn export, disregarding domestic requirements, major unemployment
due to recent floods and imposition of 17 percent VAT would harm the country’s fragile economy, it added.

Value-added textile industry leaders urged the government to take substantial steps to salvage the industry,
which is already on the verge of extinction along with the export-oriented textile industry, due to electricity
and gas load-shedding.

Pakistan’s value-added textile industry plays a vital role in the national economy and is a key forex earning
sector, offering livelihood to the labour force of the country.

Chaudhry Salamat Ali, Chairman, Pakistan Hosiery Manufacturers and Exporters Association (PHMEA
- North Zone), has warned that the Reformed General Sales Tax (RGST) would yield negative
impact over the worst crisis hit value-added textile industry.

Talking to newsmen, he declared RGST bill is most complicated than ongoing GST and urged the
government not to impose RGST that is going to push this export-oriented and labour intensive
value-added textile sector to the wall.

He said that the textile exporters have strong exceptions to the government for continuously
ignoring the reservations of the exporters regarding the imposition of the RGST and zero rate
facility will not be withdrawn. But it is fact the government had not yet cleared the out standing
refund claims of billion rupees so far.

He said that the government is also holding up millions of exporters' money under export rebate
which is at present around 1 percent. Now it seems impossible in the present state of functioning
that FBR could smoothly release 15 percent of GST refunds. To meet this shortfall in working
capital, textile exporter/entrepreneur would resort to bank for financing its export for which mark-
up rate itself is on a parallel rise. Thus value-added textile sector would be lead to an ultimate
collapse, which facing shortage and day by day growing bills of gas, electricity and basic raw
material. This situation badly upset the doing business of value-added textile sector, he added.

Chaudhry Salamat Ali said that energy crisis plus gas shedding for four days in a week and shortage
of raw materials including cotton yarn and polyester yarn are the hitting continuous process textile
industry and directly threatening the competitiveness of national exports.

He said that the decision for gas shedding four days in a week would send a very negative signal to
the foreign buyers. "Instead of coming up with some sort of relief package, the industry is being
pushed to the wall. The gas curtailment or disconnection is tantamount to throttling the industry to
death, he concluded.

a) Electricity crisis:-
As a consequence of load shedding the textile production capacity of various sub-sectors has been
reduced by up to 30 per cent. The representatives of the all textile associations presented their serious
concerns on the huge losses being incurred due to electricity load shedding and the instant rise in the
Electricity tariff. They said that the industry has already been crippled due to record loadshedding
during
winter months.