Pakistan share in global textile trade dropped from 2.2 percent to 1.8 percent during last five years and may go down to 1.5 percent by 2020 if the sector remains uncompetitive in the region with low power supply, high cost of doing business and desired relief in taxes. This was revealed in the Senate Standing Committee on Textile Industry that met with Mohsin Aziz in the chair where serious concerns were shown over the struggling situations of the industry.
The Committee and Textile Ministry opposed the proposal of Pakistan Textile Mills Association (APTMA), imposing Regulatory Duty on cotton yarn import from India, saying that the matter may be resolved in consultation with value added sector. The committee also expressed serious concerns over $4 billion disparity in China-Pakistan exports-imports figures and recommended that measures be taken to discourage smuggling.
The committee recommended that the government must immediately lift ban on the new gas and electricity connections for the textile industry besides provision of uninterrupted supply of gas and electricity. It further recommended for zero rating on exports, liquidation of pending refunds, strengthen domestic commerce, removal of duties and Man Made Fiber (MMF) imports and introduction of investment support schemes for textile sector.
Chairman APTMA S M Tanveer said that the government has put a burden of Rs 170 on the textile industry including Rs 72 billion in the head of tariff rationalisation surcharge, Rs 38 billion Gas infrastructure Development Cess and Rs 60 billion innovative taxes on consumption/production and export. He said that export-oriented textile industry cannot sustain the burden of Rs 170 billion in the form of taxes and surcharge.
He mentioned that the country's textile industry has a potential to double its export from $13 billion to $26 billion if its cost of doing business is reduced, which will further provide 3.5 million additional employment opportunities. He mentioned that textile export has declined by 2.65 percent per month during the last financial year. He said that due to the high cost of business, 30 percent of our industry has been closed with value of $3.5 percent of total export.
He said that the present export capacity of our industry is $17 billion, but we have exported only $13.5 due to high cost of doing business. "This industry is at the brink of closure due unviable investment environment amid high cost of doing business," said Tanveer. Due to the high cost of business, as many as 40 textile mills have been closed during the year and rendered 0.5 million workers jobless. "It is the government responsibility to protect the local industry," he noted.
Giving comparison to the cost of doing business, the APTMA chairman mentioned that energy tariff in Pakistan is 14 percent as compared to 7.3 in Bangladesh, 8.5 in China and 9 in India. Interest policy rate is 5 percent in Bangladesh, 5.4 percent in China, 7.5 percent in India and 7 percent in Pakistan.
The APTMA chief noted that the energy tariff was 9 percent when the oil prices was $102 per barrel in the international market and when it came down to $50 per barrel, then the tariff was increased to 14 percent, which is beyond the understanding. The chairman committee senator Mohsin Aziz, who was also former chairman APTMA, said that textile industry is facing serious challenges and close to collapse due to high cost of business and the government must seriously consider bailing out through rationalisation of the policies and regulations.
The committee was informed that annual textile export growth in Bangladesh is 20 percent, India 12 and China 12 whereas in Pakistan is 3 percent. With such speedy growth, Bangladesh has increased its share in global textile trade from 1.09 percent in 2006 to 3.3 percent in 2013. Similarly, India increased from 3.4 percent to 4.7 percent, China from 27 percent to 37 percent while Pakistan has dropped from 2.2 percent to 1.8 percent. The APTMA officials said that if growth factors remain the same, Bangladesh's share in world market in 2020 would be 6 percent, India's 7 percent, China's 56 percent and Pakistan will be limited to 1.5 percent.
The major factor behind the declining trend is the erosion of textile industry's competitiveness, particularly against the huge incentives being provided by the competing countries to their export sectors, the APTMA officials informed. They further said that about Rs 100 billion of textile exporters are stuck up in sales tax, customs rebate and federal excise duty refund regimes creating severe financial crunch. However, Federal Board of Revenue official confronted the figure by saying that it is no more than Rs 25 billion and would be cleared soon as committed by the government.
About 30% production capacity of textile industry is impaired. Due to conducive policies, heavy investment was made in terms of machinery in competing countries. During 2008-13, China added further 35.29 million spindles; while India added 14.20 million and Bangladesh added 1.98 million spindles in textile sector. In Pakistan, only 1.02 million spindles were added in five years. Later, talking to media, Mohsin Aziz said that 70 percent of the proposals of the APTMA have been recommended by the committee to address textile industry issues.
Comments
Comments are closed.