Government is going to ensure that none other than the affected companies are benefited from the stimulus package to be declared for sick textile industry.
Mr. Boniface Mphetlhe, Deputy Permanent Secretary in the Ministry of Trade and Industry, said that they cannot discard the possibilities that few companies may gain by false pretences, but added that if any such incidence occurs, it will be duly taken care of.
The bailout scheme is meant to help the companies to subsist the damage caused due to economic downturn, while simultaneously moderating the job losses in textile sector. The Ministry was engaged in finalizing details of the scheme and same will be communicated to the industry, shortly, Mr. Mphetlhe informed.
There is no obligation on the Government to assist the companies, but industry requires support to deal with nationwide problems like unemployment and universal economic development, he stated.
Mr. Mphetlhe said that, the stiff budget for 2010-11 extends a clue towards the government's ongoing struggle to overcome the effects of economic meltdown. However, assistance has been rendered to diverse sectors of the economy, to accelerate economic revival.
The companies are seeking comprehensive Southern African Customs Union (SACU) duty credit certificates, utility and rent subsidy, sale and export incentives in addition to machinery and soft loan working capital. SACU duty credit certificate is an export stimulus plan intended for assisting the textile and clothing firms to become globally competitive.
Credit certificates are granted depending on the value of export sales. The profit margins are based on the export product. For example, exporters of clothing earn a profit of 25 percent of the export sales value, whereas the same ratio is eight percent in respect of yarn exporters, 12.5 percent for fabric exporters and 17.5 percent for household textiles.
The certificates can be exercised either to counterbalance the duty on imported raw materials or the same can be traded with other manufacturers for similar use.
SACU was involved in formulation of a long term policy for country's textile and clothing industry which will replace the textile and clothing industry development programme. The policy was aimed at development of a strategy, compliant with the World Trade Organization (WTO) rules, Mr. Mphetlhe informed.
Fibre2fashion News Desk - India