The government should take preventive measures following the EU and Vietnam have reached an agreement for a free trade agreement (FTA), as the emerging economy can capture Pakistan export market, which has already shrunk due to high energy cost and discriminating import duties on industry raw material, Fareed Mughis Sheikh President of Multan Chamber of Commerce and Industry (MCCI) said.
This agreement is the first of its kind that the EU has concluded with a developing country, which will definitely benefit from its FTA on very nominal duties.
Fareed Sheikh feared that Vietnam will capture Pakistan textile value-added export market despite having status of GSP Plus because Pakistan is not availing this facility due to very limited product lines mainly due to strict import policy of the government.
The exports of textile and clothing have declined sharply during the last six months (July-Dec), he said.
Fareed said that Vietnam has achieved the milestone amid huge foreign direct investment due to attractive policies, which will surpass even the Bangladesh textile export of $27 billion, because the country has fixed the target of $30 billion textile export for current fiscal year.
He cautioned the government to address the issues of value-added textile sector, as the continued drop in exports may widen further due to Vietnam-EU FTA, massive decline in cotton production and high import duty on yarn. He asked PM Nawaz Sharif to personally direct policy makers to work for reduction in all input costs otherwise the export-oriented industries would not only close down their operations but millions of workers would also lose their jobs.
He said the value-added textile sector is burdened with multiple taxes with high cost of inputs, tariffs of gas, electricity, raw material, and is further harassed due to short supply of all these most essential utilities, he added.
Country is facing almost 35 percent shortfall in cotton production as cotton bales arrival has registered 9 million bales against the set target of 14 million bales, he added. Despite huge shortfall of cotton 10 percent regulatory duty on cotton yarn import from India is not understandable which will not only to encourage cartelization but also squeeze raw material.
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