Concern over garments
The chairman of Pakistan's Leather Garments Manufacturers and Exporters Association (PLGMEA), Fawad Ijaz Khan, has issued a statment expressing serious concern about the future of the leather garments industry there.
He said the sector was having to handle "double taxation", with taxes applying on imports of raw materials and exports of finished garments.
His organisation had hoped the federal budget for 2008-09 would bring relief, but Mr Faward insisted none had come. Exporters can receive a refund on some of the tax they have to pay, but only by going through what the statement called a cumbersome and time-consuming bureaucratic process.
Some manufacturers have had exemption certificates freeing them from the responsibility of paying import tax on raw materials, but Mr Fawad said in the statement that customs authorities in some cases since the government published the new federal budget have ignored the certificates and insisted on payment of the 2% tax on imports.
He also said that demands from customs officials had led to several shipments of raw materials lying in ports because garment manufacturers have refused to pay the tax. Raw materials imports have also been made more difficult by the government's insistence on a 35% cash margin on letters of credit for imports, but Mr Fawad said he was hopeful this condition may soon be withdrawn.
