Policymaking is one of the most important tools the state has to shape a particular sector and provide a roadmap of where it ideally wants the sector to be. If drafted and implemented in letter and spirit, a good policy frame-work can provide a sound business enabling environment.
However, when it comes to the textile policy, things have turned out to be far from ideal. In fact if one goes through the list of goals mentioned in the Textile Policy 2014-19, there has been hardly any progress. In fact things have gone in quite the opposite direction.
Recently, the Pakistan Readymade Garments Association (PRGMEA) called for a revision to the existing textile policy. Its Chairman, Ijaz Khokhar, is of the view that the revised policy should be disaggregated to cater to each segment of the textile value chain rather than having a one size fits all approach.
The garments sector has been the one that has shown promise when it comes to boosting exports as all other categories have shown sluggish and in many cases negative growth. However, the policies as they stand currently are tilted more in favour of the initial value chain such as spinning.
Ijaz believes that the lack of quality fabric locally has constrained the garments sector exports as foreign buyers now require garments made from G3, G4 and technical fabric raw materials which are not locally produced by weavers in Pakistan. The Textile Policy aimed to “improve fibres mix in favour of non-cotton from 14 to 30 percent.”
But the progress has been negligible. Similar to the ambitious target of doubling textiles exports from $13 billion per annum to $26 billion per annum. The case of pending refunds both for sales tax refund and custom rebates has sapped exporter liquidity.
This column has already shed light upon the poor economic policies that have led to surplus sugarcane at the cost of cotton production. Then there has been the undue imposition of anti-dumping and non-tariff barriers even on items whose local production is negligible.
Recall that APTMA has been trying to limit the import of cotton yarn by requesting FBR to make it compulsory for all consignments of imported yarn from India and China to be subjected to independent inspections at three stages in order to curb yarn import. The Pakistan Textile Exporters Association (PTEA) is strongly against the move and believes there will be a severely negative impact on the entire textile value chain and points out that only 3 percent of total yarn consumption is being imported.
Another example is the National Tariff Commission’s (NTC) recent imposition of an average anti-dumping duty of roughly 7 percent on PFY exporters from Malaysia and China with the duty ranging from 3- 11 percent.
PYMA believes that for polyester FDY yarn (HS. Code 5402.4700) the local production amounts to only 3 percent and the remaining is imported. Similarly, polyester DTY’s (HS Code 5402.3300) local production amounts to only 25 percent of the required needs of the weaving industry whereas the rest again needs to be imported.
Then there is the cost competitiveness element. There has hardly been any proper subsidy implementation for the higher value added textile segments which includes garments. It is the need of the hour to subsidize inputs to encourage value addition. But again the opposite stance is being taken. Gas and electricity rates for the local industry are already far higher than neighbouring India, Vietnam or Bangladesh.
The time has come then to reevaluate and revise the Textile Policy 2014-19 and instead develop policies for each sub-component of the value chain including spinning, weaving and readymade garments. The over-arching aim should be to provide a level-playing field to all players while at the same time increasing their cost competitiveness in global markets.
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