The latest surge in electricity prices would further increase the cost of doing business for textile sector and may further hamper the production capacity of export-oriented sector, observed a parliamentary panel. The concerns were also admitted by Federal Minister for Commerce and Textile Pervaiz Malik. He said that second LNG terminal will be operational within the next two months, which would help decrease power rates.
The Senate Standing Committee on Commerce and Textile which met with Shibli Faraz in the chair on Wednesday called upon the government to take tangible steps and formulate policies aimed at boosting the textile sector of the country.
The federal minister said that industry is demanding reduction in electricity prices, but Ministry of Water and Power has its own issues and limits. Furthermore, the industry is demanding uniform gas prices across all provinces, he added.
Pervaiz Malik said that the Prime Minister has given a task to the Ministry for framing recommendations in consultation with all the stakeholders for reducing the cost of doing business and boost country exports. The committee would also consider whether the Rs 3.10 tariff rationalization surcharge should go away or not. After finalization of recommendations, these would be shared with the PM, he added.
Members of the committee expressed concern over the decreasing trend of the cotton crop and urged for immediate intervention from the government to incentivise the cotton growing sector and introduce modern seeds with better results. The committee observed that Exim Bank is limited to documentations only.
The chairman of the committee remarked that level playing field needs to be provided to the textile sector as it is being considered the backbone of the country's economy and contributing the exports.
Shibli Faraz said that there is huge scope for research and development and a clear cut vision needs to be adopted to make with proper mechanisms to produce results and achieve goals.
Senator Usman Khan Kakar observed that excessive use of pesticides and reliance on low quality seeds have affected the crop production and compromised quality of the product. "Quality seeds should be introduced for better results," he remarked.
The Textile Division apprised the committee of the overall situation of textile sector. It was informed that Pakistan is the 4th largest producer of cotton. They informed that a major slump was witnessed in production of cotton crop during the last two years. However, the government has taken initiatives to address this challenge and during this year production of 12.6 million bales is expected.
The Committee decided to further deliberate on the issues relating to textile sector. The committee also recommended to the textile division to improve infrastructure of the sector and bring dynamism for competing in the international markets.
The committee was further informed that Rs 10 billion have so far been released against the claims of Rs 18 billion of textile sector under the Prime Minister Package of incentives for exporters. An amount of Rs 14.43 billion has been paid to the textile sector by FBR against RPOs issued up to April 30, 2017. Other competitors like Bangladesh, India, China and Turkey are subsidising their textile exports.
From July 2016, five export-oriented sectors including textiles have been made part of zero rated tax regimes. The zero rating facility is available on purchase of raw materials, intermediate goods and energy. Duty free import of textile machinery is continued. Further the government has reduced the Export Finance Scheme (EFS) mark-up rate from 9.4 percent in June 2014 to 3.0 percent in July 2016.
Textile Division recommended short term plans including implementation of the PM package, payment of sales tax refunds, Rs 30 billion as on June 30, 2017, payment of customs duty draw backs, Rs 7.5 billion, relief on electricity and gas tariffs and relief on sales tax on electricity bills for power-looms.
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