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All Pakistan Textile Mills Association (Aptma) Chairman Waqar Mannoo has strongly opposed the demand to levy duty or impose any restriction on the export of yarn.
In a meeting, called by the Export Promotion Bureau (EPB) here on March 9 to discuss the issue raised by Pakistan Hosiery Manufacturers Association (PHMA) to levy duty on export of yarn, Mannoo firmly opposed the demand, saying that the real issue behind the PHMA's move was "to get quality yarn at cheap rates locally by restricting export, which was incomprehensible."
He lauded the vision of the government in enhancing the exports, and appreciated the role of Commerce Minister Humayun Akhtar Khan in removing obstacles in the way of promotion of the country's economy.
He also appreciated the role of the EPB in resolving and facilitating various segments of the textile industry in increasing exports under the chairmanship of Tariq Ikram.
At the outset, Waqar Mannoo informed the meeting that production of cotton yarn/mmf yarn was more than its requirements and substantial quantity of 1.55 million metric tonnes, ie 75 percent of the total production of yarn, was annually available for local consumption.
He refuted the impression that the hosiery yarn or any kind of yarn was in short supply, and said that the value-added sector should not have any complaint on the availability of required yarn.
Mannoo also rebutted the allegation of the PHMA that the Aptma preferred to export on lesser rates rather than to selling locally. The PHMA was asked to give one good reason for selling at lower price, which they could not provide, and posed a counter question as to why the spinning mills would sell at lower rates?
The Aptma Chairman categorically stated that there was no such set a policy and made it clear that the spinning mills exported yarn to foreign buyers against the letter of credit at the best available price where payment was certain.
As against this, most of the local dealings were made on contract basis where payment was not definite and the yarn was mostly procured through agents on credit of longer periods, which naturally cost more to the local consumers.
He said that the importers had to pay sea freight, insurance, etc and this extra cost was not borne by local consumers.
He said that the spinning mills were operating under the same infrastructure as was available to the hosiery manufacturers, hence the PHMA's point of view that their competitors in the international markets had better infrastructure facilities and concessional tariffs was irrelevant as it was not on account of the Aptma.
He advised the PHMA to buy yarn directly from mills against local letter of credit, which definitely would cost them less.
Referring to the quality of yarn available for local consumption, he said that the spinning mills were producing quality yarn both for knitting and weaving from local and imported cotton and there was grievance in this regard from local consumers.
Mannoo revealed that the figures of yarn consumption, obtained from the office of Textile Commissioner, reflected appreciable increase in consumption of yarn by value-added industry.
Consumption increased by nine percent in 2002-03 as compared to 2001-02, he said, adding increase in yarn prices was mainly on account of escalation in raw cotton and man-made fiber prices in local as well as international markets.
Consumption of all fibers, including local and imported, available to the spinning industry indicate that 75 percent of yarn production during the last five years was available to the value-added industry.
He also referred to the abolition of textile quota under the World Trade Organisation (WTO) regime, taking effect from January 1, 2005 that ensured free and fair trade among the member countries, and held the view that the move of the PHMA for creating a restrictive regime also negated the spirit of the WTO.
The PHMA conceded in the end that they did not want any facilitation/concession on export of hosiery products by putting any kind of restriction on the export of yarn, but would ask the government to devise such policies that encouraged export of value-added textiles and did not injure the export of other textile items in the regime of post-quota scenario.
"If the PHMA is facing difficulties in the export of their products due to competitiveness of their products and needs more facilities/relief or require policy guidelines for value-added sector in the post-quota scenario, they may approach the government instead of dragging the Aptma in the matter," he said.
Waqar Mannoo said that the regime of free import/export policy had encouraged substantial investment in the textile sector, leading towards healthy growth in exports.
He warned that any diversion from the existing set and stable policy could result in vulnerability of the industry at different stages. In view of the inevitable WTO regime in place from. January 1, 2005, any intervention in the tariff rationalisation/liberalisation would be detrimental to the vital interests vested in the textile industry, he said.

Copyright Business Recorder, 2004

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