LAHORE: The Pakistan Readymade Garments Manufacturers and Exporters Association (Prgmea) has suggested the government to restore the `No payment no refund system` for the value-added textile sector which has been facing a serious financial crunch because of held-up refund claims of billions of rupees.

`The sector`s production can grow by over 80 per cent if stuck up funds are released immediately, said PRGMEA Central Chairman Ijaz Khokhar and Vice-Chairman (NZ) Malik Naseer in a joint statement here on Saturday.

The Federal Board of Revenue (FBR) has yet to clear more than Rs13 billion under Drawback on Local Taxes and Levies and around Rs17 billion sales tax under refund claims of the valueadded textile chain, they said.

The payable to the exporters had been held updespite firm assurance held out by the government that all refunds of exporters would be cleared by September 2014.

`Collection of 2pc sales tax and then refunding is not only an exercise in futility but involves a large number of FBR personnel and precious time of FBR which can otherwise be utilised to bring more sectors in tax net to enhance revenue,` said the Prgmea office-bearers.

They appealed to the government to issue instructions to the FBR for speedily releasing cheques against all the pending Sales Tax Refunds and Customs Rebate Claims to continue export earning process which was now on declining trend.

They urged the government to allocate the export development fund (EDF) to the textile ministry so that it could be utilised for development of export. `Textile sector`s contribution to EDF stands at Rs11.5 billion, they said.