All Pakistan Textile Mills Association (Aptma) spokesman Tanvir Sheikh has said that the textile industry is experiencing the worst crisis in Pakistan's history as no steps are being taken by the government to remedy the situation.
The industry has faced with numerous problems like daily power outages, increase in mark-up rates by over 300 percent within two years, increase of labour costs by over 33 percent in one go in the last budget, increase in polyester prices by rupees four in the past two months alone, increase of gas prices for captive power generation by 36 percent in the last one year, huge increase in transport costs of its raw material as well as its finished products. He further said that huge amounts continue to remain stuck up in sales tax despite zero-rating of this sector.
He added that to make matters worse the consumption of local yarn had decreased primarily due to reduced usage of yarn in the weaving sector which was working on substantially reduced timings in the current load shedding regime.
In sharp contrast to our situation, Bangladesh gas prices for captive power generation was one third of ours, fuel prices are nearly half thus reduced transport costs, labour costs are one third of ours besides, cash rebates paid on purchase of local yarn and fabrics.
Preferential duty rates are charged on BD products. India is giving direct subsidies on interest rates to the entire textile chain including spinning. The biggest threat to current Pakistani textiles is that no buyer wishes to visit Pakistan due to local problems. All these factors in combination are acting as a deathblow to the industry.
He further stated that 116 mills had already been closed down, and only 24 of them were Aptma members, while a further 20 mills were on the verge of closure this month. A total of 500,000 spindles had been closed down until last month and now this figure was said to have gone up to 700,000 in last three weeks alone. The banking sector has an exposure of Rs 120 billion to the textile industry and a large portion of this will become stuck up if proper measures are not taken to resolve the basic problems.
The entire chain including raw material to suppliers have amounts of over Rs 40 billion stuck in this chain, which is on the verge of collapse. The magnitude of the crisis could be judged by the fact that hundreds of thousands of workers had become unemployed and further jobs continued to be at risk if immediate positive policy changes were not made, he pointed out.
The Gherzi report commissioned by the government of Pakistan clearly elaborates on three points, namely high mark-up rates, high trash content in cotton and low productivity of workers, while it appreciates the state of the textile machinery particularly in the spinning sector making it clear that there is no quality or BMR issue as is being made out by certain groups having vested interests. Even those points, which had been highlighted by the government's own consultant, had not resulted in any positive action, he maintained.
The desperation and despondency of the textile industrialists can now be gauged from the fact that they are raising as point no. 1 on their agenda asking the government that if it cannot do anything to rectify the situation, then at least it must give them an honourable exit strategy as provided by Chapter 11, so that they can call it a day and resign to the fact that their personal capital is gone along with years of hard work but at least they should not continue to be hounded as criminals for being at fault for setting up an industry, he added.