Pakistan has become a surplus polyester staple fibre (PSF) producing country but its export is hampered by heavy duty on import of raw material depriving the country of precious foreign exchange.
Iqbal Mangrani, Vice-Chairman Export Sub-Committee of the Karachi Chamber of Commerce and Industry (KCCI), said on Sunday, "there is an acute shortage of polyester fiber in China and Far Eastern countries and Pakistan is in a position to export provided the government removes 15 percent duty on import of PTA used in the manufacturing of polyester."
He said: "Presently, the capacity of local PSF manufacturers exceeds domestic demand and some of them are operating well below their capacity because they are unable to export due to lack of competitive export price."
Globally there is a shortage of PSF and the FOB price is around dollar 1 to 1.5 per kg.
If the PSF units are allowed to import duty-free raw material - PTA/MEG Pakistan can export substantial quantities of the fibre to China and Far East.
The KCCI Export Committee official pointed out that the main obstacle to export is 15 percent duty on import of raw material used in polyester because the government has provided sovereign guarantee to ICI producing PTA locally up to 2008.
As a consequence of this guarantee, prices of locally manufactured PSF are much higher than the prices prevailing in the international market.
In addition to this, importers of raw material are not paid refund of duties and taxes in full.
Mangrani said: "If for any reason, the government can not withdraw their sovereign guarantee, the PSF makers should be allowed duty-free import of PTA/MEG for manufacturing polyester for export.