The Government should ensure that the local Textile Industry gets the required raw materials at internationally competitive prices by ensuring a free import and export policy on cotton.
MAINTAIN FREE IMPORT AND EXPORT POLICY ON COTTON.
COTTON PRICE STABILIZATION
Cotton prices in Pakistan market fluctuate unpredictably based on market rumours. The graph of cotton price of India and Pakistan demonstrate the unpredictably based on market rumours. The graph of cotton prices of India and Pakistan demonstrate the price fluctuation comparison between the countries, despite their geographical proximity. Cotton price fluctuation hinder effective planning in the export marketing.
PROPOSAL:
-- Steps be taken to control price fluctuation of Cotton and keep the prices with in a price-band. A workable price stabilisation policy be made to stabilise prices of Cotton and all other fibers.
COTTON BUFFER STOCK
Pakistan has been fortunate to have an exceptionally good crop this year, but this may not be the case in successive years. The Government should maintain buffer stock in the country to counter production shortage any year.
-- Cotton Stock to Use Ratio of India is 33% and China 24% - Pakistan Stock to Use Ration is low and thus vulnerable.
-- In order to face crop failure eventualities, buffer stocks of cotton is required. Government of Pakistan could attract foreign cotton merchants for establishing warehousing in Pakistan at EPZs.
Port Qasim or Gwadar Port. Currently they are maintaining the warehouses at Jabal Ali (Dubai) and Bandar Abbas (Iran).
COTTON SUBSIDY
Low return on investment in the farm sector in Pakistan in due to the reason; international prices are low because of the subsidies given to the farmers by other counties. Industry cannot remain competitive when it is buying cotton at higher than international parity prices. This has created misconception as spinners and farmers view each other as opponents. The industry cannot thrive without its local cotton and the farmers cannot survive with out a stable industry lift their produce. APTM view farmers as a strong base in value addition chain.
PROPOSAL:
-- The present measure of market intervention by TCP has not directly benefited the farmers the Government may provide direct subsidy to farmers to ensure a fair return, till the time the subsidies are withdrawn by other countries also.
COTTON CROP ESTIMATION
The Cotton Crop Estimation Committee is entrusted to estimate and report the cotton crop size every year. The committee meets regularly and gives its estimates about the crop size the committee over the years has worked hard to arrive at the estimates of the size of the crop, but it has been observed that estimates are not based on totally scientific method.
PROPOSAL:
-- The crop estimation methods used by the committee needs further improvements. Satellite imagery or similar modern scientific techniques may be adopted for the purpose.
RESEARCH & DEVELOPMENT FOR IMPROVING RAW MATERIAL
A strong research on cotton is the most important measure required to be taken by the Government. Some of the priority areas in research are the development of new varieties, combining earlyness, tolerance to drought and pest resistance besides high productivity and desirable fiber traits. There need to be a special emphasis on biological control and development Trans-genic Bt cotton varieties.
PROPOSALS:
-- A high-powered policy board be formed to guide all cotton research institutes under the Pakistan Central Cotton Committee.
-- Creation of an endowment fund to augment the funding requirement of cotton research institutes.
CUSTOM GINNING
Presently growers sell their seed-cotton to a middle man who buys cotton either for himself or on commission basis for the ginners. Once cotton is delivered to the gin it is the property of the ginner and he is responsible for the profit and loss on the sale of lint and seed.
In most of advanced countries farmers resort to "Customs Ginning", the Ginning factories act as service provider and charge the farmers per bale of cotton ginned. Farmers sell their ginned cotton directly to buyers. This systems has several advantages:
-- Admixture of different varieties is avoided
-- Middleman profit is eliminated
-- Interaction with buyer educates the farmer of buyers' requirements
-- Farmer's income increases.
PROPOSAL:
-- The concept of Customs Ginning be promoted to provide better returns to the farmers.
POLYESTER STAPLE FIBER
The exports by Pakistan are tilted towards cotton for the reason that Pakistan is producing very limited number of products in non-cotton sector. The innovations in MMF has been few, this has forced Pakistan out of a major portion in the international markets.
PROPOSAL:
-- Zero duty zero drawback on PTA, MEG, PSF
SALES TAX
Sales Tax Liquidity problem is created due to stuck up of billions of rupees in sales tax refunds. General Sales Tax @15% on major inputs of Textile Chain be abolished.
PROPOSAL:
-- It is proposed to remove sales tax from the Textile Value added chain
STATISTICS ON INDUSTRY
The importance of correct data for statistical analysis and market research for planning purposes cannot be overemphasised. Unfortunately the data available to the industry through relevant Government departments is inconsistent and unreliable. The actual number of spindles working, cotton consumed or yarn and cloth produced are not available to the industry. A large number of small units have mushroomed in the country and not registered with any government body.
PROPOSAL:
-- legislation and its implementation is needed to register small industrial units, so as to have a reliable industry production data for industrial planning.
-- Industry Associations be strengthened to collect/ collate industry statistics.
HUMAN RESOURCE DEVELOPMENT PROGRAME
The survival and growth of our labour intensive garment industry will depend on the establishment of exemplary training institutes and programs that will bring them greater skills and make them more efficient to produce high quality cost effective garments.
PROPOSAL:
-- Human resource development programs of international level be initiated in spinning, processing, weaving, garmenting and marketing on a fast track.
-- Women workforce particularly in rural areas need to be targeted to enter in to these programs by establishing training institutes.
-- Technical assistance from international agencies (i-e JICA, UNIDO, etc) in skill development programs be utilised.
INFRASTRUCTURE DEVELOPMENT
Creation of modern / reliable infrastructure support to reduce lead time is extremely important for the industry. The industry has already started feeling pinch, due to non availability supporting infrastructure for transporting export surplus from up-country. The bottle necks are due to non availability of:-
-- Load bearable roads
-- High standard/reliable Transportation fleet
-- Railways carriage for transporting products from up-country to Karachi port in 24 hours.
PROPOSALS:
-- Road / rail improvement to reduce transportation lead time for up-country exports
-- Establishment and expand of industrial zones / ware housing facilities
-- Establishment of textile testing laboratories for certification of exports.
-- Equip export clearance offices / Dry ports
FOREIGN DIRECT INVESTMENT
There is a need for attracting substantial Foreign Direct Investment. Most of the countries, which have shown exceptional growth especially among the developing nations, are the ones who are recipients of continuous FDI and significant Joint Venture arrangements from the developed nations. Unfortunately our 'country profile' / perception by foreign investors does not draw a very pretty picture. This fact needs to be addressed more realistically.
FTA's: FTA's are playing an important part in International. Trade, countries that have no real inherent comparative advantage in producing textile goods will be able to supply their products at lower price than countries like ours who have a comparative advantage in producing the same product.
PROPOSAL:
-- In depth study needs to be initiated on the effects of RTA and FTA's on the future competitiveness of Pakistan textile industry.
-- MOFA/ MOC to aggressively look for carving RTA's / FTA's for market access.
NON-TARIFF BARRIERS TO TRADE
As the quota regime has ended, the developed countries are fully prepared to use anti dumping, safeguards and any other conceivable measures to protect their domestic producers and employment. Our public sector stalwarts dealing with these issues will have to be more abreast of the tricks of these unfair trade practices and how to address them in order to protect our own industries.
The opportunities and challenges in view of the new era of global trade requires our think tanks, both in the private and public sector to combine resources, and address this window of opportunity with a much greater degree of passion and commitment than has been shown so far.
PROPOSAL:
-- Form a strong textile committee, comprising of committed and dedicated individuals from important Textile Associations and government stalwarts having in depth knowledge on these important issues. This committee must be given the powers and resources to complete the task given, within a reasonable time frame.
SOCIAL COMPLIANCE ISSUES
Industry would be facing a number of issues on social compliance in the export market. EDS was imposed on industry in 1991-92 on all exports items @ 0.25% of the export value.
PROPOSAL:
-- The EDS be spent on preparation of compliance by the export oriented industry. Proportionate to exports made by the members of Trade and Industry Associations, so that the industry should prepare itself to face the WTO challenges.
-- Recommendations on Textile Industry and compliance submitted by Textile Commissioner Office be implemented.
ELECTRICITY COST
Electricity constitutes 40% of the total operating costs in Textile industry, which is evident to be a substantial segment of the total operating cost. The unit of electricity has increased considerably over the years, adding burden to the operating costs for the industry. In view of this problem, some of export oriented and quality conscious units have installed their own electric power generation sets, but this means that these units had to make investment in the domains that were not related to their business.
PROPOSAL:
-- Electricity Tariff for export oriented industry be refunded to make it competitive under globalisation.
NATURAL GAS
The Textile Industry is facing delays in obtaining Natural Gas connections for electricity Generation. Natural gas is a big energy resource for Pakistan, it can provide low cost energy for the textile sector. Energy generated by natural gas can be used by textile sector for value generation, this will make our products competitive in international markets.
Fertiliser industry is one of the biggest consumers of natural gas. Economic planners need to evaluate natural gas consumption in making fertiliser verses value addition by the export oriented textile industry.
PROPOSAL:
-- Textile Industry be given Natural Gas connection for electricity generation on high priority
-- The supply of Natural gas for export oriented Textile Industry be ensured
LONG TERM CREDIT LINE FOR TEXTILE INDUSTRY
The industry is preparing to meet challenges of WTO, and is prepared to make further investments. The modern machinery used in Textiles is mainly imported from Italy, Germany, Japan, China, Switzerland etc.
PROPOSALS:
-- Credit lines with developed countries be negotiated.
-- State Bank of Pakistan should come out with longer period (7-10) years credit facility.
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