APTMA laments high cost of doing business

Some 140 textile mills have closed their operations, while another 75 to 80 mills are on the verge of closure due to high cost of doing business. According to All Pakistan Textile Mills Association (APTMA), with the closure of 140 textile mills, about one million workers have lost their jobs and further closures will add to the unemployment figure by another 0.5 million. Due to the closure of about 140 mills with various mills operating below capacity, textile exports are suffering a loss of over $4 billion per annum, he added.
Zahid Mazhar, Senior Vice Chairman, All Pakistan Textile Mills Association (APTMA), has said in a statement that the country has already entered an era of de-industrialisation where industries are closing. "In 2005 the share of manufacturing in the GDP stood at 19 percent which has fallen to 13 percent. Large scale closures of textile spinning mills has already taken place resulting in drastic increase in unemployment as well as reduction in consumption of locally produced cotton. This will hurt both manufacturing as well as the agriculture sectors of the economy," he maintained.
Pakistan's textile exports have declined during the last four years because of the cost of doing business which is the highest in the region, he said and added that the textile industry has been hit hard due to high cost of energy, both gas and electricity, leaving Pakistan's exports uncompetitive in the global market as the cost of production of both gas and electricity is about 30 percent higher than the regionally competitors - Bangladesh, India and Vietnam.
Mazhar said both spinning and weaving sectors are the backbone of textile value chain. Both have faced the brunt of high cost of doing business, hence left unviable throughout the country. Today, spinning industry is incurring heavy losses by selling yarn below cost. The production of yarn and fabric is substantially more than the local consumption; therefore, their exports must be encouraged, he added.
He said Regional countries are following export-friendly policies to increase their exports. In the last 10 years, Bangladesh textile exports rose from $9.8 billion in 2006 to $35.2 billion in 2016, ie, about 260 percent and China $144 billion to $255 billion, up 77 percent. In addition, India's textile exports surged from $18.4 billion to $35.4 billion, Vietnam's $ 6.6 billion to $30.5 billion, while Pakistan's textile exports have gone down from $ 14 billion to $12 billion. The share of these countries in the global textile trade is increasing while the share of Pakistan has reduced from 2.2 percent to 1.5 percent.
He demanded of the government to remove the levy of Gas Infrastructure Development Cess (GIDC) on gas. He further demanded that the government should provide gas at the regionally competitive rate of Rs 400/MMBTU as was earlier announced by the ECC in November 2016 but the decision could not be implemented.
Senior Vice Chairman APTMA further requested that the following measures be taken on an urgent basis to improve the efficiency and viability of textile industry: Expeditious payment of outstanding sales tax refunds and other refunds to address the liquidity issue and a check on large scale influx of imported yarn and fabrics in the country to save the domestic industry. He added that Free Trade Agreements and Preferential Trade Agreements must be reviewed and revisited in such a way that the exports to those countries be increased, he maintained.
He also demanded of the government to encourage investment in spinning, weaving and finishing sectors in such a manner that maximum cotton be converted into yarn and further downstream value added products because it will not only facilitate farmers and the spinning industry but would also help whole textile chain and the economy.
He said that due to the lucrative investment policy in the above referred period the total installed capacity of the textile industry and the production of basic textile products rose by more than 40 percent. The Senior Vice Chairman APTMA said the textile industry of Pakistan is capable enough to bring the economy out of morass. He hoped that the new Prime Minister Shahid Khaqan Abbasi and his cabinet would take immediate steps to arrest the drastic decline in exports during last four years, as any further negligence or delay will take the economy to a point of no return.
He urged Prime Minister Shahid Khaqan Abbasi to issue instructions to the authorities concerned to implement textile package of Rs 180 billion, announced earlier this year for the support of exports and the textile industry. Mazhar also demanded that the notification for release of refund under Drawback of Duties and Taxes Order from July 01, 2017 to June 30, 2018 be issued without the precondition of growth in exports of 10 percent in 2017-18 as compared to 2016-17. Payments under this package must also be released without further delay, he maintained.