Mian Zahid Aslam, Chairman Pakistan Textile Exporters Association (PTEA) has said that the main factor contributing towards crisis in the textile industry is the high mark-up rate on industrial credit.
In an interview with the Business Recorder, he said that the industrialists acquire credit from the banks to import new machinery at an average rate of mark-up on credit ranging around 12 percent. Due to decrease in exports the industrial units are not working to their full capacity. Consequently repayment of these loans obtained on higher mark-up rates is creating difficulties for the Industry, he added.
Commenting over the "Crisis in Textile Sector", Zahid Aslam mentioned, with the introduction of new World Trade Order (WTO) (Ist January, 1995) and phase out of textile quota regime the textile sector of Pakistan is continuously under pressure. The Textile exports during the fiscal year 2005-2006 of the country decreased by 11 percent.
Textile exports have dipped by 10 percent during the months of July-August, 2007. As a result of this downward trend, dozens of textile mills have closed down and thousands of workers have been rendered jobless, he pointed out.
Zahid Aslam said that it would be a wrong impression to say that textile sector in Pakistan is unable to compete in the international market. Contrary to this Pakistani textile products have earned good reputation on the basis of their quality workmanship. Pakistani bed sheet is considered one of the best in quality and is demanded like hot cakes all over the world. As a consequence of this great demand the bed sheets manufacturing factories of Europe and other countries are facing closure.
These countries of Europe, South Africa, Peru, Brazil etc, have imposed an anti-dumping duty on our bedsheets in order to stall the exports of bedsheets from Pakistan, he added.
Zahid Aslam made it clear that it would also be a wrong impression to say that Pakistani textile is slow moving and that this sector has not properly prepared itself to face the challenges of WTO and hence has been left behind in the race of competition in international market.
In fact the Pakistani textile industry had started to prepare itself for WTO five years ahead of its inception. The Pakistani exporters had started balancing, modernising and replenishing their textile machinery and upgrading their manufacturing line since the year of 2000. It was in this context that the textile sector imported 5 billion dollars machinery during 2000 and 2005 in order to meet the expected increase in demand of goods in the wake of open international market.
For example those factories which had two rotary machines installed 6 rotary machines and printing machines of 6 colour were replaced with printing machines of 24-colour technology, he added.
Zahid Aslam said that the Pakistani textiles were rendered incompetitive in the international market because the prices of Pakistani products in international market were higher as compared to the rival countries like India, China, and Bangladesh. Accordingly the foreign buyers diverted their buying orders towards these rival countries.
Various internal and external factors are responsible for this continuous downward trend in the exports and industry. Commenting over the decline in exports, Zahid Aslam said internal factor and protective duty on raw material are other major factors. The government has levied protective duty on polyester fibre, dyes and chemicals etc, as a result of this the raw material used in exports has become costlier raising cost of production higher and consequently making other products incompetitive.
Zahid Aslam Chairman PTEA disclosed that productivity output shortage of our workers is comparatively less. Recently during our visit to China we observed that workers were on duty for 12 hours and were giving output one and half time more than our workers, he added.
He said that high rates of electricity and gas thus causing negative impact over the textile exports as well as textile industry as compared to Bangladesh, Indonesia and China. Transportation expenses of inward and outward as well as sea freight are frequently increased in the country which is also a factor contributing towards hike in cost.
Commenting over the "taxes and levies", Zahid Aslam said that large number of taxes and levies at federal, provincial and local levels has burdened the cost of manufacturing goods. In external factors, anti-dumping duty, comparatively higher customs tariff and non-tariff barriers are creating severe problems for exporters-cum manufacturers, he pointed out. Chairman PTEA said that these external factors have also pushed up the cost of our products and made us incompetitive in the international market.
Zahid Aslam Chairman PTEA mentioned that the quality and variety of Pakistani textile productions have been universally acknowledged as the best. The Industry and exports have the capability to compete in international market. We can compete with our rival exporters but we can not compete with foreign governments, which help their exporters in reducing the cost of production. We are not demanding any concession or subsidy or incentive. We are only demanding actual zero rating and level playing field.
If immediate and timely remedial measures are not set the industry will collapse and Pakistan will lose the foreign market which is disastrous consequences for the national economy. Aftab Ahmad, Secretary General of PTEA was also present.
Comments
Comments are closed.