Value-added sector: PRGMEA, PHMA urge govt to provide level playing field

LAHORE: Pakistan Readymade Garments Manufacturers and Exporters Association and Pakistan Hosiery Manufacturers and Exporters Association on Tuesday demanded that government should provide a level-playing field to the value-added sector by providing uninterrupted gas and power supply on competitive rates besides relaxing duties on import of raw material.

While reacting strongly to the government's proposal of removal of subsidy on gas to the export-oriented sector PHMA called for the continuation of subsidized gas supply to the industry at a competitive rate of Rs6.5 per unit.

PHMA Central Chairman Shahzad Azam Khan appealed the government to fulfil its commitment of the continuation of electricity and gas subsidy for export-oriented sectors to support the momentum of growth in exports during the fiscal year 2021-22. He said the government, in August this year, had approved Rs68 billion for extension of concession rates of electricity and gas, which should now be utilized for a sustained increase in exports by providing energy at regionally competitive rates.

Shahzad Azam Khan emphasized the need to keep incentivize export-oriented sectors in order to take the exports to the next level, as the knitwear garments export have already surged by 36.57 percent during FY 2020-21 while Pakistan's overall exports have increased from $21.39 billion to $25.30 billion, up by 18.28 percent in which textile group shares the highest by 60.86 percent while knitwear tops with 25 percent.

PHMA's central chairman said that Pakistan's exports of knitwear and other knitted garments and hosiery always play the leading role in exports growth, as the industry continued to show its resilience to the coronavirus pandemic. He urged the government to give first priority to the textile export industry in respect of gas supply which contributes more than 60 percent to national exports.

The government in the Natural Gas Load Management Policy has upgraded five zero-rated export sector industries to the second position, which should be given first position and general industries second position in the priority list followed by commercial, domestic and other sectors to increase the production and fulfil the aim of the government to enhance exports. He said it was highly unfair that the government had accorded first priority to the domestic sector in terms of supply of gas on subsidized tariff through cross-subsidy by charging high rate of gas from industrial consumers.

"We cannot afford any kind of interruption in production activities due to suspension of gas supply, in the knitwear industry," Shehzad said. The business community has been kept in the dark about the issues of RLNG supply which was highly unfair. He urged the government to take immediate measures and ensure an uninterrupted gas supply to the industry during the winter season at affordable rates.

He said the value-added sector achieved growth because of preferential access to the 28-nation European Union under the GSP Plus scheme which can further be enhanced with the government's support. He said that Pakistan direly needed to establish an Aggressive Marketing Plan for garment export to get maximum benefits of GSP-Plus status.

PRGMEA regional chairman Shiekh Luqman also demanded the govt to prioritize value-added apparel industry in energy supply at competitive rates on the patron of Bangladesh, as the government has increased the average power tariff by over 40 percent during the last three years followed by the proposed hike in gas rates by withdrawing subsidy for the export industry.

He said that the PRGMEA fully opposes this irrational move of the government to withdraw subsidy on supply of gas to the export industry under tariff rationalization plan.

He pointed out that the government had announced to increase electricity base tariff by Rs1.39 per unit across the country from November, while it had already enhanced the base power tariff by Rs1.95 per unit in January 2021 along with quarterly and monthly electricity price hike under fuel adjustment formulas, totalling the power price hike to over Rs5 per unit.

He said that the NEPRA has allowed an increase of Rs1.65 per unit in power tariff, under quarterly adjustments, which will empower the distribution companies to collect Rs173 billion from consumers in the next one year. The decision would put another burden of Rs168 billion on the consumers during the current fiscal year. The revision would increase the average base power tariff, excluding various taxes, surcharges and duties etc, from Rs13.97 per unit at present to Rs15.36 per unit in total.

Luqman said the increase in power and fuel prices will increase the cost of production for the industrial section which in turn will impact the ease of doing business and exports.

Copyright Business Recorder, 2021