Clarification

In a recently published article, the All Pakistan Textile Mills Association (APTMA) made a number of assertions about the textile industry in general and the polyester fibre industry in particular without any strong evidence to back their claims.
One of the claims made by APTMA was that high domestic Polyester Staple Fibre (PSF) prices, which have risen from PKR 148/kg to PKR 192/kg since January 2018, have played an important role in rendering the domestic industry uncompetitive. The PSF industry is driven by global crude oil prices, and regional raw material prices of two derivatives of crude oil; PTA and MEG. As such, the increase in PSF prices in the last seven months is a direct result of the increase in raw material prices, in line with regional PSF prices. In addition, when the increase in domestic and regional prices are compared, e.g. in China where the current domestic PSF price stands at PKR 208/kg, a difference of PKR 13/kg can be witnessed to Pakistan's prices of PKR 195/kg. Such a significant price difference affords enough opportunities to domestic PSF consumers and exporters to remain competitive.
The Association's chief solution to its claims is a reduced import duty on PSF which it maintains would result in the revival of the textile industry. Unsurprisingly, this demand has been followed up by numerous other assertions, which APTMA believes will encourage this revival such as; reduced energy prices, a reduced interest rate, a reduction on the duty of cotton imports, an increase on the duty of imported yarns, a regulatory duty on yarn imports, and more. However, the method of fixing the duty on PSF (set in consultation with all stakeholders) is in line with the norms of regional and global standards and the World Trade Organization's (WTO) requirements. In Pakistan, the National Tariff Commission (NTC) is responsible for assessing an industry's tariff and the anti-dumping duties (ADD) to ensure fair trade, and the Commission has been supporting the downstream textile industry wherever needed, such as with the application of the 5% regulatory duty on yarn imports. The existing cascading tariff structure was put in place almost a decade ago with the agreement of all stakeholders, including APTMA, and with the involvement of all relevant ministries (eg textile, commerce). Some would say, highlighting these issues at this point is calculated to influence a more favorable outcome for APTMA.
Another claim made by APTMA was that the negative cascading of import duty is causing an existential threat to the domestic textile industry. Considering that the cascading structure was developed to favour the value added industry, as mentioned above, such a claim seems a little far-fetched. The change that APTMA is referring to is actually regarding the ADD on Chinese PSF exporters only. It took the domestic Polyester industry almost three years to obtain some sort of ADD relief, which was eventually approved as a minimum of only 2.82% against one of the biggest exporters from China (Hua Hong Fiber, which exports almost 80% of total PSF imports into Pakistan), whereas ADD is not placed on any other country. Furthermore, against a 7% duty on PSF, the import duty on spun polyester yarn is 11% (for APTMA's protection) while the regulatory duty stands at 5%, which totals to a 16% protection for yarn across the board from all suppliers and from all the countries.
APTMA has also claimed that the 7% duty on PSF increases to about 9.8% to 18.51% with the imposition of ADD. As mentioned above, this duty increase is only applicable on Chinese companies. Globally all manufacturers are free to export into Pakistan with only 7% duty; however, they find the market unattractive as our domestic prices remain competitive even after accounting for the 5% duty on PTA.
APTMA has further claimed that the duty structure in Pakistan over the last 20 years has been such that it has crippled the textile industry. In reality, the policy actions that were taken to protect the downstream spinners were taken at the cost of polyester industry resulting in the closure of almost 40%of its capacity. If APTMA's claims are true and accepted by policy makers then overseas exporters will stand to gain tremendously through dumping as the local competition would be eliminated over time through closure of capacity.
APTMA has asserted further that import duty has rendered the textile industry uncompetitive in both local and export markets. In actuality over 70% of all production from the textile industry flows into exports. Additionally, the Duty and Tax Remission Scheme (DTRE) is available to exporters to import PSF.APTMA has acknowledged that the FBR has made the two-step DTRE process even easier. Whilst a handful of APTMA members are using it, the rest of the industry continue to buy competitively priced domestic PSF, and clamor to have the import duty completely abolished to the longer term detriment of the country.
APTMA has also claimed that Pakistan only produces normal semi-dull and bright fibre in deniers0.8 to 1.4. Upon inspection of the domestic polyester industry, there are several variants that are being produced today such as anti-microbial fibres, colored fibres, 2.0 denier trilobal fibre, EHT fibre, recycled fibres and has the capability to manufacture many other variants if the demand exists. In fact, it is common knowledge that the domestic polyester industry has offered alternatives for years but the spinning industry could not make use of these variants.
The Polyester Fibre Manufacturers Association (PSFMG) is able to refute APTMA's claims through facts and in its view, the APTMA endeavour is to gain an unfair advantage for its members at the cost of the other industries. The PSFMG will come forward to present facts and evidence to the new government to support its assertions.-PR