ISLAMABAD: Terming the recently announced industry supporting package insufficient , All Pakistan Textile Mills Association (APTMA) has urged the government to rethink its entire scheme meant to avoid layoffs at this difficult time.

In letters to all top decision and policymakers who includes, Energy Minister, Finance Advisor, Commerce Advisor, Governor SBP and Chairperson, the textile industry, has appreciated the government for formulating a loan scheme for manufacturing companies specifically to pay their wage bills during these extremely difficult times.

Association argues that essentially the scheme requires the individual PFIs to assess whether the manufacturing company/concern will remain a going concern, have repayment capacity, sufficient and liquid collateral, with credit risk to be borne entirely by the PFI and in essence a conviction by both the Bank and the industrial concern that the COVID 19 situation will have vanished and markets returned to normalcy within four months. “This huge leap of faith is an impossibility and requires the manufacturing concern owners to further tighten the financial noose around their necks they find themselves in due to no fault of their own. We are confident that no bank (with credit risk) would lend to a concern with as unsure a future as is faced by the whole of the textile sector of Pakistan. As currently defined, we find the scheme requires a major rethought if it is to be even partially effective in warding off massive layoffs,” said Shahid Sattar, Executive Director, in the letter.

The textile industry is of the view that under the current circumstances, for the textile sector to survive, government in addition to amending the wages Loan Scheme for the State Bank to assume the credit risk, must also suspend Sales Tax returns and payments, interest charges for the quarter ended December 31, 2019, and utility bills for the billing month of March pertaining to the textile sector which are becoming due as early as April 15, 2020. “In the absence of any cash flow either from export or domestic sales, it is simply not possible to make these or any other payments,” he said, adding that the sales tax payments involve a possible refund at least over a hundred days in the most favorable circumstances where the export and domestic markets are fully operational. This statement of fact is fully supported by the irrefutable evidence which is that FBR has currently disbursed refunds only up to December 2019,” according to the letter.

APTMA maintained that the future outlook for textile markets is extremely bleak where currently, the bulk of the export orders already stand cancelled and where not cancelled the foreign buyers are asking for a long-term extended credit. Western analysts have unequivocally classified textiles as one of the markets that would take years to recover to its pre-Covid turnovers as textiles is not an essential commodity and consumer preferences will necessarily change for the worse on non-essential consumer goods, once the markets reopen.

The domestic market for all practical purposes has completely collapsed with little hope that it would even recover to 50% of its pre-Covid levels even by the end of the year. The cash flow crisis is even more acute for indirect exporters who have not been paid anything out of the releases for DLTL etc.

“As a matter of record, these indirect exporters have not been paid a dime over the last 3 weeks and are unlikely to receive any payments from the direct exporters. The direct exporters face a very stark choice between payment of salaries and wages (even if vide the new loan scheme), interest charges, energy bills and suppliers of intermediate products and raw materials. Indirect exporters or manufacturers of intermediate products are already in this crisis situation,” he continued. Terming the current circumstances very grave, the Association has submitted the following proposals: (i) suspend all Sales Tax returns and payments for the Textile sector for an initial period of 3 months starting April 10, 2020;(ii) defer payment of all interest charges on all types of financing facilities for a year commencing payment for first quarter 2020;(iii) defer payment of all utility bills initially for the billing months of March and April 2020 ;(iv) amend “Refinance Scheme for Payment of Wages and Salaries to the Workers and Employees of Business Concerns “ and ;(v) introduce an alternative scheme whereby government should assume the responsibility for 50% of the wage bill of workers retained at the minimum wage level while 50% is paid by the industrial concern. Disbursement to be made directly to Banks to get matching funds from the Industrial Concern and disbursed directly to the workers bank accounts.