EFS amendments feared to harm apparel sector
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LAHORE:
The Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) has opposed the recent amendments to the Export Facilitation Scheme (EFS), warning they will harm the apparel sector, particularly the small and medium enterprises (SMEs).
In a statement, former PRGMEA chairman Ijaz Khokhar urged the Federal Board of Revenue (FBR) to take strict action against the companies that had misused the EFS facility instead of penalising the entire export sector. He emphasised that SME exporters were already struggling and there was a need to delay the amendments, which would prevent further damage.
A major concern is the reduced utilisation period for the imported raw material, now capped at nine months, with extensions requiring approval of a board committee. The apparel production involves multiple steps including designing, sourcing, manufacturing and shipping. Such a restrictive time frame would make it difficult for the exporters to meet commitments, he said.
Another issue is the requirement of bank guarantee for the enhanced face value, which disproportionately affects the SMEs. Many lacked financial resources to secure such guarantees, potentially barring them from essential export facilitation benefits, he said, adding that the policy limited their ability to expand into international markets.
He voiced fear that the amendments introduced through the SRO 301(I)/2025 would weaken Pakistan’s competitiveness in apparel exports.
The industry is already grappling with rising production costs, energy shortages and logistical challenges. Additional regulatory burdens will only worsen the situation, threatening jobs and the export potential.
Khokhar noted that global buyers were highly sensitive to the delivery timelines and bureaucratic delays could result in losing the orders.
“The new amendments impose unrealistic restrictions on the utilisation of raw material and require bank guarantees that the SMEs cannot afford. These policies will negatively impact Pakistan’s export growth and textile sector,” he remarked.
The ex-chairman also expressed concern over the increased compliance burden and policy uncertainty, which could weaken Pakistan’s position against regional competitors like Bangladesh and Vietnam.
The exporters need a streamlined, transparent system to facilitate trade rather than complex regulations that lead to delays and additional costs. They are already navigating economic challenges, including the fluctuating currency rates and increasing freight costs. Introducing more hurdles will only make it harder for them to sustain operations.
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