Karachi, June 17, 2020: Danish Hanif, Chairman, Pakistan Yarn Merchants Association (PYMA) has expressed frustration over non-provision of relief on imported raw materials of textile industry and SMEs in Budget 2020-21 and opposing the imposition of further regulatory duty @ 2.5 percent, termed the move as disastrous for the textile sector and SMEs.
In an appeal to Prime Minister Imran Khan, Chairman PYMA has requested that no RD should be imposed on the raw materials of the textile sector to get the domestic industries out of COVID-19 impact and to promote the industrialization.
“The government should provide equal opportunities to all sectors of the economy in a conducive environment to meet the challenges of the devastating effects of the COVID-19 epidemic on the economy & have to create employment opportunities and equal business opportunities will have to be provided on the basis of a uniform policy for the export, import and industrial sectors”, he opined.
Danish Hanif said that Polyester filament yarn is an important raw material for weaving, knitting and home textiles. Most of the needs about 70 percent of the user industry are met by imports because the local manufacturers only produce basic specs and are only able to meet about 30 percent of the total demand. The PFY yarn (HS codes 5402.3300 and 5402.4700) is subjected to a higher customs duty of 11 percent and additional customs duty of 2 percent. Polyester is a value chain item, in its cascading already has a 2 percent additional customs duty on the yarn level which PYMA has been opposing for 3 years. However, it has not been abolished which will have an effect of 4.5 percent.
In addition, PFY is subjected to anti-dumping duty ranging from 3.25 percent to over 11 percent from imports originating from China and Malaysia while China & Malaysia fulfill 80 percent need of PFY of our local industries. The protection available to the local manufacturers of PFY is excessive as it and a further imposition of RD @ 2.5 percent as envisaged in the current budget would be grossly unjust and a disincentive for exports and industrialization.
“Proposed budget calls for a 3 percent value addition tax to be collected from commercial importers of PFY at the import stage. Commercial importers of Raw Materials like PFY sell their goods to SME sector at a minimal profit. This is clearly a very harsh and unrealistic tax and would end up increasing the cost to SMEs sector”, Danish Hanif feared.
Danish Hanif further said that “We appreciate the fact that the government has reduced the withholding tax on commercial importers from 3 percent to 2 percent under erstwhile SRO 1125 while the withholding tax on industrial importers is 1 percent. We believe that the WHT should be uniform for both classes of importers considering that government intends to remove the discriminatory withholding tax regime for other sectors”.