Pakistan Textile Exporters Association (PTEA) has expressed huge disappointment over increase in Export Refinance rates. Finance rate escalation would further hit the textile exports and industrial activity in the country.
In a press statement, Wasim Latif, Chairman and Adil Manzoor Ellahi, Vice Chairman PTEA said that this step taken by the central bank would increase the cost of doing business and certainly hit the textile sector hard, they said. Textile exporters have been stressing the government for reduction in the mark-up rate on export refinance but instead of lowering the same it has been raised consecutively and now it is fixed at 11 percent, which is highly detrimental for the textile industry, they said.
They expressed concern that if the State Bank of Pakistan continued to keep the same policy it would damage the textile industry and also affect the exporters adversely. The business community is already affected by the high electricity charges and gas tariff, they maintained.
Pakistani exports are already overburdened with exorbitant input costs, taxes and duties, they continued. Furthermore, continuous price hikes of Petroleum products, Electricity and Gas tariff have increased the cost of production exorbitantly throwing the industry and the exports in the battle of survival, they stated. They pointed out that instead of providing facilities and incentives as the Governments of other regional countries were providing to their exporters, our Government was embarking on strangulating the exporters.
Financial credit rate of 11% export refinance including bank spread would discourage the modernisation as well as the replenishment of manufacturing line because the industrialists were already facing financial crunch, they said. Deprived of the cash flow, the textile exporters were unable to sustain their turn over and hence the decline in exports, they said. High mark up rate on commercial credit would further bog down the exporter's efforts to boost their export turn over.
The woes of exporters have multiplied, Wasim Latif said, and the rates of Gas, Electricity tariff have increased manifold while drastic load shedding of Gas and Electricity has compounded the problems enhancing the cost of production and delaying shipments of export goods rendering the exporters to go into the default against commitments with their foreign buyers. Textile sector constituting 62% of the national economy and economy could not be revived ignoring this important and major industrial manufacturing sector, he said. Pakistani textile exports are already facing tough competition from rival countries in international markets as these rival countries India, China, and Bangladesh are providing substantial relief and assistance to their exporters by way of export finance and industrial credit, he said.
Presently the country is facing serious economic crisis and the situation further deteriorated by floods and huge loss of cotton crops and therefore, this decision would be detrimental for the exporting industries, textile in particular. PTEA appealed to the government to take stock of the gloomy situation as a result of the above increase in SBP's refinance rate and save the industry from further losses and avoid announcing any further anti business policies particularly at the present critical juncture.
PTEA leaders urged the Government to take serious steps to strengthen national economy and to boost national exports. They demanded to redress the industry and export problems on emergency basis in order to reduce the cost of doing business in the country and provide level playing field to our exporters enabling them to compete successfully with their regional rivals in the international market.
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