Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) has urged the government to extend the period of Regulatory Duty (RD) on export of cotton yarn so that local industry could get raw material at reasonable prices.
Talking to Business Recorder former Chairman PRGMEA, Bilal Mulla said that cabinet committee on textile must take into account all the ground realities before taking any decision to remove 15 percent RD.
He further alleged that a massive amount of Rs 17.5 billion sanctioned for the textile sector in the financial year 2009-10 lapsed due to delay in its release by the Finance Ministry which is a disadvantage to the industry.
"Only Rs 9.5 billion were released to the State Bank of Pakistan by the Finance Ministry during the financial year 2009/10 and the balance lapsed at the end of the financial year," he added.
The five-year Textile Policy 2009/14 was announced on August 13, 2009 with an export target of $25 billion by 2014. The Textile Ministry announced various policies and incentives to achieve this target.
Around Rs 42 billion was earmarked in the budget 2009/10 to boost exports, of which Rs 27 billion was sanctioned for textile exports alone.
According to him, $25 billion export target could only be achieved if textile exports increase by a minimum 25 percent during the next four years. Instead, he said, textile exports recorded only five percent growth in value during 2009/10, and quantity declined by more than 10 percent. Pakistan recorded total exports of $19.3 billion in 2009/10 against a revised target of $18.8 billion, out of which textile exports accounted for $10 billion. Increase in value of exports was a result of increase in price only.
"If you talk about the increase in exports, see whether there has been real growth. Just giving numbers is misleading," he said. Mulla said that to achieve export growth of 25 percent per annum the government should impose a ban on raw cotton exports and extend 15 percent regulatory duty over yarn exports worth less than $3.5 per kilogram for the next two years.
Pakistan has a share of only one percent in the world apparel market of $375 billion a year, but 30 percent textile exports are yarn exports.
"It looks like Pakistan is becoming a raw material supplier rather than a value-added supplier," he continued. Pakistan's cotton exports have earned average rates of around $1.4 a kilogram, yarn $2.2 a kilogram, fabric $4 a kilogram (price varies from $1.5 to $6 per metre), home textiles $6 a kilogram and garments, including knitwear, $12 a kilogram.
Turkey, one of the leading countries in fashion designing, is a major importer of denim from Pakistan. It exports jeans for $13 a piece made from Pakistani denim, however, Pakistan exports jeans for only $9 a piece made from the same denim.
"Reason in price difference is closeness of Turkey to European market. It knows the fashion over there, besides its shipment takes no more than six days to any port in Europe. We are located at a distance of 30 days," Mulla said. Bangladesh textile exports are 40 percent more than Pakistan despite the fact that it does not grow cotton. "There are 40 liaison offices of European and American buyers in Bangladesh with huge staff," Mulla said.
Except ginning mills, more than 95 percent of around 3,500 Pakistani textile factories, including 800 home textile units and 300 spinning mills, are based in only five cities: Karachi, Lahore, Faisalabad, Sialkot and Multan.
"The reason is wages. If the government cuts down minimum wage by 35 percent in rural areas, there would be more factories in the rural areas that would help boost the economy of the country, in general, and rural areas, in particular," he continued.