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Is The Tax Rebate Rate Raised And The Textile Industry "Rescued"?

2008/8/1 15:23:00 30

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Export Rebate Rate Of Textile Enterprises

Raising the tax rebate rate remains difficult for the textile industry.

Analysts believe that most textile enterprises need not to raise export rebates, but rather to offer preferential interest loans.

Textile export tax rebate rate adjustment details

The Ministry of Finance and the State Administration of Taxation yesterday decided to raise the export rebate rate of some textiles and clothing, from 11% to 13%, raise the export tax rebate rate of some bamboo products to 11%, and the new tax rebate rate will be implemented from today.

Experts believe that raising the tax rebate rate for export oriented enterprises is a great advantage, but it is difficult to reverse the slowdown in the export of the entire textile industry, profits decline trend.

Tax adjustment helps enterprises reduce costs

"The increase of export tax rebate rate can alleviate the pressure caused by the rising cost of enterprises, especially the global economy is facing recession, and the international market demand is declining, which has a considerable impact on the export of the textile industry."

Sun Huaibin, director of China Textile Economic Research Center, said.

This year, the export situation of China's textile and garment enterprises is grim. The total value of textile exports increased by 15.5% in the first half of May, down 1.4 percentage points from the same period last year, and the total growth rate of garment enterprises' gross export value was 9.2%, a decrease of nearly 10 percentage points over the same period last year.

In the first half of this year, many textile enterprises in Guangdong and other places went bankrupt or lost money.

The export tax rebate rate increased to provide a breathing space for a large number of export oriented enterprises on the verge of collapse.

Wang Rong, an analyst with the joint securities and textile industry, said that the change of tax rebate rate has different effects on listed companies, and exports have greater positive impact than major enterprises.

If the selling price is unchanged, if the tax rebate rate is raised by 1%, the gross profit margin of enterprises will be increased by 1%.

The slowdown in export growth is hard to reverse.

Although the tax rebate rate is good for textile and garment enterprises, analysts believe that in the second half of this year, the slowdown in textile and garment export growth is hard to reverse.

Wang Rong said that raising the export tax rebate rate of 2 percentage points is only helping the general trade export enterprises to extend the pition period, and the trend of slowing export growth is hard to reverse. The reason is that the root cause of the slowdown or decline in export growth still exists, that is, the cost pressure is still increasing, and the pace of RMB appreciation has not slowed down.

Zhang Bin, a researcher in the textile industry of the state securities company, also pointed out that the export growth rate of textile products declined this year, mainly because of the decline of the European and American economies, the acceleration of the appreciation, and the increase of the production cost of raw materials and labor. The export rebate rate is not one of the main factors that affect exports.

Although the increase of tax rebate rate has stimulated exports to a certain extent, it has limited effect on corporate profits and export growth.

If the tax rate is raised, foreign businessmen will correspondingly reduce their quotations. In a word, the income of China's textile enterprises will be smaller than that of foreign businessmen.

Many analysts including Zhang Bin believe that the current textile enterprises are facing difficulties in operation. The core factor is the high homogeneity of China's textile enterprises, the serious oversupply of capacity and the disorderly competition in the market.

After more than 20 years of rapid development, the industry is in urgent need of integration. At present, the temporary difficulties of the market just provide a rare opportunity. Raising the tax rebate rate to some extent disturb the normal adjustment of the market.

Follow up fine tuning measures or expectations.

It is worth noting that the textile and clothing export tax rebate rate callback measures are intensive research conducted at the top of the government, and issued to the next stage of macroeconomic regulation and control.

Zhang Bin pointed out that after the central government set down the macro-economic development strategy for the second half of the year, the finance and taxation department took the lead in adjusting the export tax rebate policy. This shows that the "stable foreign trade development" in the 6 opinions of the State Council Economic Working Conference earlier this week is being implemented.

This means that in the light of future economic development, management has begun to take concrete actions.

The market has the view that the export tax rebate rate is only the beginning of the callback, in the coming period is likely to continue to introduce similar fine-tuning measures.

"For most textile enterprises, what they need is not to raise export rebates, but to get preferential interest loans."

Zhang Bin said.