Exporters of Leather in Punjab, facing the worst-ever crisis due to complete stoppage of cheques of duty drawback claims

In his press statement, Mr. Azam Malik Chairman Pakistan Tanners’ Association (Northern Zone) said that exporters Lahore and Multan are badly hit by liquidity crisis which is worsening due to held up of their funds in duty drawback refunds. Respective collectorates are unable to release pending cheques against sanctioned claims of duty drawback.

“It is irony of fact that in the chase of unrealistic revenue targets the duty drawback claims of exporters are being held up in the system”, Azam Malik said. Chairman PTA (North) told that Association has numerous meetings with the concerned collectors but of no use. Their chase of un-realistic revenue targets disabling them to release duty drawback claims for which no authority in FBR is holding them responsible.

Installation of expensive online web based clearing systems could not enable FBR to expeditiously release exporters’ money which has now being held up in the wait of meeting the so-called ‘revenue targets’. Presently, an amount more than Rs. 300 million is lying pending at Collectorate of Customs (Preventive) Lahore on account of duty drawback payable against consignments dispatched for exports from Lahore Airport during the past one year.

Explaining the scenario, Mr. Azam Malik explained that despite expensive cost of air freights, exporters of leather in Lahore prefer dispatching leather consignments for exports through airport being an efficient way to meet the strict deadlines of customers abroad importing leather from Pakistan for further use in the development of their different products and articles. At the same time that all Lahore based leather manufacturing units are importing chemicals and spares from Karachi sea port and paying all duties and taxes in Karachi and this revenue should be considered for Lahore based units when fixing revenue targets.

Here, it is a disappointing fact for the leather exporters of Lahore which are being asked to route their imports to Lahore dryports in order to generate revenue for Lahore Collectorates. Chairman Mr. Azam expounded that in the absence of efficient consignment handling system at Lahore dryports, it is unviable for a leather manufacturing-exporting house at Lahore to arrange imports through Lahore dry ports. Moreover, levy of Provincial Infrastructure Development Cess (@0.9% + 1.05%) by Punjab and Sindh governments respectively, adds significant cost hence discouraged imports at dry ports upcountry.

Mr. Azam Malik invited government’s attention on 33% decline in leather exports during the past 19 months. He also compared Bangladesh export of leather which has posted an increase of 12.2% in the last seven (07) months of 2016-17 whereas, leather exports of Pakistan declined by 7.50% in the same period. Regional countries are promoting and helping exports to grow but FBR is holding exporters own funds of rebates and sales tax to show higher reserves and neglecting exports.

However, Custom collectorates, which are liable to pay these amounts to exporters, are busy in targeting revenue for government but they do not prioritize refunds to our exporters due to shortage of funds round the year.

Lahore and Karachi are under one federal unit and FBR cannot force exporters to import or export from any particular port or dry port thereby linking revenue generation with payment of export rebate. These are anti export policies and killing the leather industry which have fallen prey to these rigid policies not focusing on export enhancement. Our regional countries have taken our markets and our exports are being destroyed while their exports are on continuous increase. Eventually, such policies will leave drastic effects on trade deficit and unemployment in the country.

Mr. Malik proposed that Lahore and Multan collectorates should be declared as Export collectorates like Sumbriyal. Along with revenue targets, FBR should give rebate targets to Lahore and Multan collectorates in order to facilitate leather exporters from Lahore and Multan, he added. However, supply of sufficient funds for Lahore and Multan Collectorates is the task of paramount exigence without which the second largest exporting industry of Pakistan i.e. the Leather, may face consequential export decline.

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