Anti-dumping duties on Pakistan's exports have retarded the growth and expansion of trade to European markets, while high tariff walls in USA and other countries are making textile products incompetitive. This was stated by Tahir Ishaque Bharara, Chairman of Pakistan Textile Exporters Association (PTEA) while talking to newsmen.
He pointed out the factors responsible for incompetitiveness of textile exports and, suggesting the way out, stated that high cost of inputs, energy crisis, heavy tax burden, excessive mark-up on bank loans, protective duties, cross-subsidies and the worsening law and order situation internally, and anti dumping duties and tariff barriers externally have rendered textile exports incompetitive in international market.
Research and development support facility (R&D) is not a favour or subsidy but a countervailing measure. This facility is keeping the textile sector afloat and if R&D is discontinued export-oriented textile sector will collapse, he added.
In the budgetary, tax and trade proposals to the government, he said that textile industry and exports are under great pressure. Poor industrial productivity and frequent hikes in cost of production have made the textile incompetitive.
The PTEA chairman said that prices of raw material like cotton, polyester fibre, dyes and chemicals have jumped up. Frequent hikes in prices of gas, electricity and petroleum products have jacked up the cost of manufacturing. Sea freight and inland cargo transportation are also comparatively higher.
Regarding energy crisis, he stated that severe gas and electricity load shedding has reduced productivity, increased the cost of manufacturing, delayed export consignments and new export orders are not coming forth.
As to heavy tax burden he said that Pakistan's exports are burdened with large number of taxes and levies like income tax, withholding tax, export development surcharge, excise duty, travelling surcharges, whereas in other countries of the world the exports are zero-rated in toto.
He said that the excessive mark-up rate was also impacting the manufacturing and export sectors. Bank credit in Pakistan has not only become costlier but is also not easily available. Prevalent mark-up rate is very excessive on commercial credit as compared to regional countries. This restricts the turnover and expansion of export trade. This factor has been further compounded by recent State Bank announcement of increasing the bank mark-up by 1.5 percent and imposing letter of credit margin of 35 percent on imports, he added.
He said that polyester fibre, dyes and chemicals are allowed protection through duties and are therefore costing higher as inputs as compared to import otherwise thus increasing the manufacturing cost. Similarly, the fertiliser sector is being subsidised on gas supply and the subsidy thus allowed is being charged to industrial sector thereby putting additional burden on exports.
Due to worsening law and order, the image of the country in the world has been tarnished and the buyers are not coming to Pakistan . US and EU and other countries have issued advisories to their citizens not to visit Pakistan. The foreign buyers visit Dubai and from there they fly directly to New Delhi or Hong Kong , he added.
Presently, the PTEA chairman said, anti-dumping duties on exports have retarded the growth and expansion of trade to European markets while high tariff walls in USA and other countries are making te products incompetitive.
As a way forward towards the rehabilitation and quantum leap the Association has proposed that the textile sector should be accorded its due importance as the backbone of the national economy, a major foreign exchange earning sector at 60 percent of total forex earnings and substantial employment providing sector 40 percent of total employment.
Cheap and easy cash flow and bank loans for upgradation and modernising of manufacturing line and export turnover should be made accessible. Negative impact of cross subsidies allowed as protective duties should be reduced to zero point. Tax burden should be totally zero-rated on exports. Efforts should be made for gaining market access to developed countries and aggressive marketing techniques to expand and diversify the exports may be undertaken. Energy crisis should be solved, law and order improved, petroleum, gas and electricity prices should be frozen for export industry and level playing field should be provided to exporters enabling them to compete in the international market, he said.
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