KARACHI: Non-rectification in relevant harmonised system (HS) codes by the Commerce Ministry has made the incentive package – announced on January 10, 2017 – in-effective and unproductive for export-oriented leather sector.
“All major relevant HS codes have been missed out in the recent SRO 52(1)/2017 and almost 95 percent of leather and allied products cannot get benefit from the incentive package,” a Pakistan Tanners Association (PTA) statement said on Monday.
“Three weeks have lapsed since the announcement of the SRO but despite repeated reminders to the ministry, this has not been rectified,” it added.
PTA Chairman Anjum Zafar said continuous decline in leather exports, which currently stands at $194.779 million, was result of high cost of doing business in the region and the government’s inability to follow export-led policies.
“About 40 percent industry has already closed down and rest is on the verge of closing down, and is hardly surviving with lower production level,” he said, adding that the Pakistan Customs had failed to make refund of more than Rs 500 million to industry on head rebates for the last two years due to short funds provided by Finance Ministry.
Former PTA president Agha Saiddain said sales tax refunds were not paid from April 2016 whereas huge funds are also blocked.
He said that 75% subsidy on mandatory laboratory tests for exports announced by the commerce minister still awaiting implementation. He said that livestock population in Pakistan was depleting fast and there was a dire need to focus on the livestock industry for necessary value addition in leather footwear and other allied products.
“Leather sector of Pakistan, the 2nd biggest export-oriented industry of the country, is now dying which can be saved by the government by redressing major grievances, including HS Codes in SRO 62 (I)/2017 for prompt release of duty drawback, sales tax refund claims and early notification for 75 percent laboratory testing,” he added.
The PTA appealed to Prime Minister Nawaz Sharif, Finance Minister Ishaq Dar and Commerce Minister Khurram Dastgir Khan for early redressal of severe problems facing the industry and incorporation of remaining HS codes to avail incentive of five percent drawback of local taxes.
