High input costs hitting viability of textile industry

Pakistan:  Zahid Mazhar, Sr Vice Chairman, All Pakistan Textile Mills Association (APTMA) has said that the high input costs are resulting in closure of a large number of textile mills engaged in the manufacturing of yarn and fabrics.

Pakistan:  Zahid Mazhar, Sr Vice Chairman, All Pakistan Textile Mills Association (APTMA) has said that the high input costs are resulting in closure of a large number of textile mills engaged in the manufacturing of yarn and fabrics.

He said that both the spinning and weaving sectors are backbone of the textile value chain, and have faced the brunt of high cost of doing business, which has made them unviable throughout the country. Today spinning industry is incurring heavy losses by supplying yarn below the cost. The production of yarn and fabric is substantially more than the local consumption and their exports need to be encouraged. He said that if this trend will continue for a longer period there will be a large scale closure of spinning mills resulting in drastic increase in unemployment as well as reduction in consumption of locally produced cotton which will hurt both the manufacturing as well as the agriculture sectors of the economy.

He also demanded the government to encourage investment in spinning and weaving sectors in such a manner that maximum cotton be converted into yarn and downstream products as it will not only facilitate the farmers and the spinning industry but would also help the whole textile chain and the national economy in general. He further said that the government authorities have to revisit the agricultural as well as economic policies to ensure that the production target of cash crops like cotton be achieved. He said that few years back we had achieved production of 15 million bales of cotton, now we must make arrangements to achieve a target of 15 million bales of cotton production or even increase it further to 20 million bales.

He said that the textile industry has been hit hard due to the high cost of energy, both gas and electricity resulting in making Pakistan s exports uncompetitive in the global market as the cost of production of both gas and electricity is about 30 percent higher than the regionally competing countries like Bangladesh, India and Vietnam. The government should remove the levy of Gas Infrastructure Development Cess (GIDC) on gas. He further demanded that the government should provide gas at the regionally competitive rate of Rs. 400/MMBTU as was earlier announced by ECC in November 2016 but was not implemented.

He urged the Prime Minister, Mr. Shahid Khaqan Abbasi to issue instructions to the concerned authorities to implement the Textile Package of Rs. 180 Billion announced earlier this year for the support of exports and the textile industry. He demanded that the Notification for release of refund under Duty Drawback of Taxes Order from July 01, 2017 to June 30, 2018 be issued without the condition of growth in exports of 10% in 2017-18 as compared to 2016-17 and payment under this package be released without any further delay. This must be treated as the first step for the revival of the closed capacity, creation of jobs and attraction of investment in the country.

In a statement issued to the press Mr. Zahid Mazhar said that delay in the implementation of textile package is rapidly eroding the exports of textile sector. He said that the trade deficit for the last fiscal year was recorded at an all-time high at US$. 32.58 Billion, imports at $53 billion while exports were recorded at merely $20.45 billion, the lowest after 2009-10. He requested the Prime Minister to place the revival of the economy and the textile industry on the top of his agenda as the government has to pay $7,432 million including $1,595 million interest in 2017 and $ 38.224 billion and Rs 15.883 trillion against external and domestic public debt respectively including principal amount and interest in the next seven years and only the increase in exports can help to pay the above debts otherwise we have to take fresh loans to service the principal and interest of the loans we have already taken.

He pointed out that the current situation is fast becoming out of control, which is quite evident from the free fall of exports over the last two and half years. While our exports are falling, the textile exports of other countries like Bangladesh, India and Vietnam are rapidly increasing every year.

He said that the Textile Industry of Pakistan is capable enough to bring the economy out of the current disastrous condition. He hoped that the new Prime Minister Mr. Shahid Khaqan Abbasi and his cabinet would take immediate steps to stop the drastic decline in exports during last four years, as any further negligence or delay will take the economy to a point of no return. He further requested that the following measures be taken on immediate basis to improve the efficiency and viability of textile industry, like expeditious payment of long outstanding sales tax refunds and other refunds to address the liquidity issue, to check large scale influx of imported yarn and fabrics in the country to save the domestic industry. Free Trade Agreements and Preferential Trade Agreements be reviewed and revisited in such a way that the exports of Pakistani goods to those countries be increased.

He also suggested the new Prime Minster as well as the Minister of Commerce and Textiles to avail the opportunity of being at the helm of affairs and to remain engaged with APTMA for arriving at workable solutions in order to solve the problems being faced by the Textile Industry.