Pakistan’s textile exporters are waiting for GST refunds.

Refund delays are causing liquidity problems to exporters. Several cases of cancellation of export orders have caused colossal financial losses to exporters.

Five export-oriented sectors were removed from zero rating from July 2019. This was followed by a 17 per cent sales tax on exports on the assurance that refunds would be paid within 72 hours.

However, the software developed for payment of refunds has failed to operate properly, resulting in blocking of significant sums. Exporters say promises of timely payment of refunds never materialise. Zero rating, which means no collection of sales tax but no refunds, helps exporters fulfil their commitments without facing a liquidity crunch. As of now exporters say they cannot meet their commitments when they have no funds to pay salaries, utility bills or purchase raw materials for new orders. They say such a situation will directly damage the country’s exports.

More than 1000 textile mills have already been closed down. Almost 50 to 75 processing mills are closed and almost ten printing mills are closed in Faisalabad region. For the first two months of the fiscal 2022-2023, the value of textile and garment exports from Pakistan increased by four per cent.