Lahore - The carpet sector cannot benefit from the duty-free access to EU market under GSP Plus status unless the government restores zero-rated regime for export-oriented carpet industry to help ease its liquidity flow. A significant ratio of working capital of carpet exporters is already stuck-up in refund regime at a time when the carpet exports have already declined to $120 million from $300 million.
Pakistan Carpet Manufacturers & Exporters Association (PCMEA) chairman Major (r) Akhtar Nazir Khan Cooki and vice chairman (NZ) Kamran Razi, raising the demand of zero rating in a statement, said the government should bring in necessary reforms and give special status to export-oriented carpet industry allowing zero-rating facility to achieve desired goal from GSP Plus scheme. Being mainstay of the economy and major stakeholder in forex earnings, export-oriented carpet sector should be given special status, they demanded.
“If the government wants to fully utilise the GSP Plus scheme, it should immediately enforce the previous system of zero-rating for export-oriented carpet industry which would mean no deduction and no payment of sales tax refund to help ensure cash flow for industry to meet export contracts. After the elimination of zero-rating, sales tax refund of up to February 2013 by the FBR is still pending. Hence a huge amount of carpet exporters have stuck-up in sales tax refund regime creating severe financial crunch.
Akhtar Nazir Cooki said that zero-rated sales tax facility will help restore the competitive edge in international markets for Pakistani carpets and will act to uplift the exports of the country and strengthen the national economy. He said that zero-rating withdrawal has adversely affected exports at a time when huge amount of Sales Tax Refunds are already stuck up with the Federal Board of Revenue (FBR) and exporters are facing liquidity crunch.
PCMEA Vice Chairman (NZ) Kamran Razi said that zero-rated facility was intended to save the carpet exporters from sales tax refund regime hassles but this facility was withdrawn by FBR and sales tax was imposed.
Kamran Razi said that the hand knotted carpet sector represents small industry locating in the remotest and most poverty stricken areas of Pakistan. “We provide direct labour to the most under-privileged and uneducated bottom of 5% strata of our society and around 70% of work force of this sector comprises women who make carpets at home,” he added. Kamran Razi said that carpet sector is doing a great service to the nation by providing employment to around 1 million people at their door step.