Pakistan textile sector remained at a disadvantage position with respect to energy supply, input cost, subsidies, machinery import and value addition as compared to other regional competitors and its share in the world market has dropped from 2.2 to 1.8 per cent during last five years. In a letter written to prime minister and finance minister, Pakistan Apparel Forum (PAF), complained that something is `terribly'' wrong in the policy that has brought the sector on the verge of collapse.
"This vital sector faces immense problems and hurdles which must be removed to pave the way for smooth and efficacious working of units in this sector and for boosting its exports in the best interests of the nation," the PAF added in its letter. Pakistan is the 4th largest cotton producer on the planet, but far behind than China, India and Bangladesh, the letter said, quoting the World Bank which expects "Global apparel market to reach $1.18 trillion by 2020 and $2.11 trillion by 2025 and also declares that Pakistan stands at highly disadvantages position in the international market."
According to the letter, Pakistan compound growth rate textile and apparel export from 2005 to 2013 stood at 3.6pc, India at 11.3pc, while Bangladesh''s at 16.2pc. In Pakistan, value addition for every one million bale is $1.17 billion, in India it is $1.79bn and in Bangladesh it is $6bn. Pakistan electricity tariff is $0.15KWH, India $0.13KWH and Bangladesh electricity tariff is $0.09KWH. Pakistan''s gas tariff is $6.27MMBTU, India''s gas tariff is $4.66MMB and Bangladesh''s gas tariff is $1.86 MMBTU. Pakistan''s installed capacity utilization is less than 70pc due to non-availability of energy on 24/7 basis, India''s installed capacity utilization is 90pc plus whereas Bangladesh''s installed capacity utilization is 90pc plus," the letter pointed out.
Moreover, Pakistan''s corporate tax rate is the highest at 34pc, India (25pc) and Bangladesh (27.5pc) while investments in Pakistan in machinery from 2008 to 2013 remained pathetically low. Pakistan added 1320 shuttle-less looms and 1,020,700 spindles, India added 36,410 new shuttles-less looms and over 14 million spindles during the same period and another 5m spindles are in the pipeline while Bangladesh added 22,370 shuttles-less looms and 1,987,000 spindles. Pakistan is the only country whose currency appreciated to the tune of 5pc during 2013-2015 whereas Indian and Bangladesh currency depreciated by 2.7pc and 0.7pc during 2013-2015.
It was further pointed out in the letter that Pakistan was the only country in the region which did not provide taxation subsidies, interest rate support in investment, zero rating on exports, capital support, cluster development schemes and long-term policy supports.
In addition to this, the finance minister in the recent budget has lowered export refinance rate, long and short-term interest rates. In India, all incentives in the form of taxation subsidies, interest rate support in investment, zero rating on exports, capital support, cluster development schemes and long-term policy supports were available that ends up in a hefty 11pc subsidy to exporters. In Bangladesh, all incentives in the form of taxation subsidies, interest rate support in investment, zero rating on exports, capital support, cluster development schemes and long-term policy supports were available, ending up in a huge 10pc subsidy to exporters.
The Forum further proposed appointment of advisers to Textile Ministry from Textile Centers of Pakistan - Karachi, Lahore, Faisalabad and Gujranwala from the value added sector as the move will help the government in taking vital decisions, with special attention and concern for more value addition as well as for bringing down the cost of doing business/ manufacturing /conversion to cash crop cotton.
A number of proposals suggested by the value added sector for turning around the sector are as follows:
a) "no payment no refund" system for exports to save futile exercise of wasting precious time of FBR as well as exporters to declare textile sector zero rated at the manufacturing stage, b) sales tax collection on local sales be collected at retail stage only as it will ensure revenue on the goods reaching the country through Afghan Transit Trade, smuggling and under invoicing, c) textile sector must be declared as separate head of account in gas tariff structure and imposition of GIDC must be stopped forthwith as the sector is already higher in tariff as compared to our competing countries, d) power tariff should be brought down at par with regional competitors, declaring it a separate head of account under tariff structure, e) immediate refund of all outstanding claims of sales tax, DLTL and customs rebate, f) front loading on the raw materials for exports must be done away with and g) priority must be given to the textile sector for supplying all essential utilities.

Copyright Business Recorder, 2015

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