The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has accused the present government of having "no vision, no priority, and no direction" to enhance exports.
"The pesent democratic and elected government is taking political decisions, but does not have vision priority and direction for maintaining exports of the country, as no decision for the benefit of trade and industry, particularly exports of value-added textile, has been taken yet," said Bilal Mulla, chairman of FPCCI standing committee on value-added textile products in an exclusive interview with Business Recorder.
He said that the Chinese government has raised tax refund (rebate) for textile exports which means that all Pakistans competitor countries in the region are providing high incentives and subsidies to their garments exporters to enable them to compete with their business rivals, but the Pakistan government is doing nothing in this regard.
He said that the Chinese governments decision to increase rebate has proved that Beijing is providing direct subsidies/incentives to their textile exporters to the tune of 17 percent of fob value. "This rebate was 11 percent in January 2008 and Chinese government is revising the rate on regular basis to upward side. Besides, Chinese exporters are also getting other indirect benefits such as low cost of electricity," he said.
Mulla said that Bangladesh is also providing direct and indirect incentives to tune of 18 percent to their apparel exporters, while monthly salary of skilled garments worker is $22, which is proof that Pakistans competitor countries in the region are extending high incentives and subsidies to their garment exporters.
Bangladesh knitwear export is $11 billion per year. Moreover, duty-free market access is also available to Bangladesh exporters in the European Union, Canada and other developed countries, he said, adding that India is also giving heavy subsidies to its textile exporters.
On the other hand, Pakistan government is not ready to provide level playing field to exporters who have become more and more uncompetitive in international clothing markets. "If the present government did not move forward to help textile exporters out of crisis, they will be out of market in the next few years," he expressed fear. The FPCCI, he said, has strongly recommended to the government to take following measurers to stop further closure of textile value-added factors and secure millions of jobs.
1) Immediate announcement of 6 percent research and development (R&D) support fund effective July 2008 under SRO 437 of 2005:
2) Reduce withholding tax (WHT) on garments from one percent to 0.25 percent at source.
3) Abolish export development surcharge (EDS) on apparel exporters.
4) Eliminate contribution of EOBI and Sessi on apparel sector and the same be replaced with comprehensive insurance plan through insurance company whose benefit will go directly to the labour.