Getting exports moving

APTMA starts the pre-Budget process

 It’s that time of year again. The financial year is not so much winding down to a close as preparing for the coming year. As the Finance Ministry and the Central Board of Revenue go into Budget mode, one of the signs of the fact that the Budget is about to be presented is the arrival of budget proposals from various trade associations and other interest groups. These proposals have to be carefully balanced, for they might end up reflecting how much the sector is willing to tolerate; and that might be a heavier burden than the government intended to impose, but they must also be realistic so that they are taken seriously. One of the proposals more anxiously awaited by the government are those from the All-Pakistan Textile Mills Association, which is representative of one of the more important export sectors of the industry.

Having sent its budget proposals, APTMA has proposed that it be allowed to meet the Finance Ministers. It seems that it is willing to lock horns on the issue of Captive Power Plants, which have been subjected to a gas levy which is supposed to force textile units to shut down their CPPs, and use grid electricity, so that Independent Power Plants can be paid capacity charges. However, grid electricity has two problems: they are unreliable, and they are expensive. APTMA has demanded that the tariff be kept at 9 cents a unit. That is roughly where it is at, despite all the IMF pressures. The IMF is deadly opposed to the CPPs, excuse it thinks they reduce demand for the grid electricity. It must be kept in mind that the CPPs use gas, which is more environmentally friendly than the oil the grid burns. APTMA has gone a step further, and demanded the right to import LNG itself, which is risky considering the international situation.

There are a number of APTMA demands, such as the reduction of advance tax, which can only be fulfilled for all taxpayers, but there are a number of industry-specific proposals, which the government is likely to consider most seriously, even if they go against IMF demands. There is no real way the textile sector can be held to performance criteria, for though one of the country’s most important export sectors, it is facing the headwinds of inflation and slowing economies, meaning that all of those concessions it wants will merely enable it to run on the spot.