Pakistani knitwear units are seriously contemplating to shift and relocate their units outside the country because of serious setback to their exports.
These units may be set up in Bangladesh, Sri Lanka and Nepal to take advantage of business friendly atmosphere and innumerable facilities being offered to foreign investors.
According to Pakistan Hosiery Manufacturers Association (PHMA), the contribution of knitwear industries whose contribution was $1.6 billion in 2004-2005 in country's exports are closing down because of high rates of utilities and incidence of taxation.
The costs of these industries are rocketing sky high and it is becoming impossible to compete in the international market and face competition from neighbouring countries like Bangladesh, India, Sri Lanka and China. The closure of knitwear units will render over 50,000 people unemployed.
Jawad Bilwani, Chairman, Pakistan Hosiery Manufacturers Association, in a press release issued here on Saturday said that the knitwear industry whose exports was the largest till the end of quota regime in 2005, prepared itself and geared up to meet the new WTO challenges.
"But unfortunately our government failed to provide us a level playing field with the result that our neighbouring countries enjoyed all the incentives offered by their government to boost its exports in the post quota free era and our knitwear exports declined." he added.
He said as per official figures published in national dailies early this month regarding exports of knitwear declined by 11.20 percent during the July-October period of the current fiscal year.
Bilwani said the single largest factor responsible for this ruin of the knitwear industry and closing down of large number of units was the exorbitant rates of utilities, gas and electricity coupled with steep in the costs.
He said that during the year 2002, the gas rate was 166.18 per MMBTU, which was 13percent higher than the closest competitor, Bangladesh, while the government was planning to further raise it by another 13percent.
If the situation remains the same the Bangladesh's exports of knitwear would be increased by 50percent due to government incentives for the sector in the current fiscal year.
Fazalul Haque, President of Bangladesh Knitwear Manufacturers & Exporters Association (BKMEA) was quoted that the knitwear exports contributed $2.82 billion.
He said, it was important to note here that despite the fact that knitwear exports recorded exports of over $1.6 billion in 2004-05. "Our exporters meet all compliance requirements of the foreign buyers and have seriously adapted themselves to the present global trends," he added.
"Our government insists that we should make ourselves more efficient to compete in the international market. These facts clearly prove that our knitwear exporters are well ahead meeting all the recognised compliance requirements internationally and keeping them fully abreast with the global demands," he added.
Pakistan knitwear exports are already facing a severe setback as a result of end of quota by the European Union and United States.
About the unfriendly policies of the government, he added that export refinance rate was 9percent in the country as against 5.25 percent in India.
He lamented that the neighbouring countries were supporting this export-oriented sector with immense amount of incentives, reduction in interest rates and attractive offers of duty drawback, while Pakistan government was burdening it with the adverse policies.
In the given scenario, it has become imperative for the government to come to the rescue of ailing and bedridden knitwear industry granting it EPZ status with no property tax and freeing it from all other provincial and federal taxes. The proposal for increase in gas rates, increase in electrici1y rates and increase in export refinance rates must be reviewed with a pragmatic decision to reduce them, he added.
"This should be done immediately on priority basis otherwise our knitwear exporters will be ousted from international market resulting in further closure of most of the 100 percent export oriented knitwear units which will migrate to neighbouring countries offering most attractive incentives. Such a scenario will consequently create mass unemployment of huge labour force resulting in total chaos disorder and serious law and order situation in the entire country," Bilwani concluded.
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