Textile woes

Textile is dying and APTMA is fighting tooth and nail for its survival. Recently, the textile lobby presented a nine-point proposal to the Federal Textile Board in a presentation that highlighted some disturbing facts about the state of the industry.

Pakistan’s textile exports peaked at $13.8 billion in 2011 and have been stagnant ever since. For the recently ended fiscal year, all textile items (other than cotton yarn and knitwear, which were up by 11 and 8 percent, respectively) have shown enormous declines year-over-year in terms of volume exported – cotton cloth by 28 percent; bed wear by 28 percent; towels by 16 percent; readymade garments by 23 percent; tents, canvas and tarpaulins by 53 percent, and artificial silk and synthetics by 64 percent.

APTMA estimates that these potential exports that were foregone would have amounted to around $3.5 billion – that’s one-fourth of textile exports and over 14 percent of total annual exports. It added that 30 percent production capacity of spinning mills is currently impaired due to the lack of energy and high cost of operating in this country.

Moreover, Pakistan’s share in the global textile and cotton market fell from 2.2 percent in 2006 to 1.8 percent as of 2013. Meanwhile, over the same period our regional competitors China, India, and Bangladesh have gone from 27 percent, 3.4 percent, and 1.9 percent to 37 percent, 4.7 percent, and 3.3 percent, respectively. This is quite a deplorable state of affairs. And as a warning, the projections indicate that if the growth factors stay constant, Pakistan’s share will have dropped to 1.5 percent by 2020.

Also, compared to the regional players, Pakistan’s textile industry is the only one that does not receive 24/7 energy availability while paying 14.25 cents/kWh for said energy (compared to India’s 9 cents, China’s 8.5 cents and Bangladesh’s 7.3 cents). Moreover, our textile industry has an installed capacity utilization of less than 70 percent (compared to the rest’s 90 percent and above).

APTMA maintains that textile is the most compliant industry in terms of electricity bill payments, but unfortunately the brunt of inefficient Discos and line losses are passed on to them in the form of various surcharges. In fact, surcharge on electricity, GIDC, and innovative taxes on exports such as WHT, together amount to Rs 170 billion; that’s 12 percent of all textile exports.

APTMA’s nine points are the withdrawal of various surcharges on electricity, withdrawal of GIDC and the recent hike in gas tariff, zero-rating to textile industry, long-term finance for ginning and spinning sector, export re-finance to spinning and weaving sectors, 5 percent export incentive for capturing non-traditional markets, a uniform tax rate of 3 percent on the whole textile value chain, cracking down on dumping and smuggling, and immediate release of the pending payments.

The implementation of at least some (if not all) of these measures needs to be seen, and soon. APTMA’s demands cannot be termed unreasonable and it’s high time something is done.