The All Pakistan Textile Mills Association (APTMA) Chairman, Amir Fayyaz expressed disappointment at delay in removing levies/duties on import of cotton and lack of clear cut direction from Petroleum Ministry on continuation of system gas supply to extent of 28 percent only to industries in Punjab.
He said the industry was expecting positive outcome from the ECC meeting but no decision has been taken to remove 4 percent customs duty and 5 percent sales tax on import of cotton w.e.f. 1st January 2018. "The industry is facing cotton shortage and severe issues of quality cotton which can only be met through import of cotton to process export orders" he stressed.
He added farmers hardly had any cotton in hand from the current crop of around 11.2 million bales since Ginners/Spinners had bought around 10.7 mn bales (95% crop) till 15th December 2017. Only a few hoarders had cotton stock and that too of low grade. Why exporters are being made hostage to protect a few hoarders, he questioned. All over the world raw material is provided duty-free to exporters at competitive prices so that they can compete internationally to win orders.
"It is a matter of concern for the Association as the government has deferred a positive decision despite clear assurances by relevant government functionaries" he added. Industry is unable to understand as to whose interest is being guarded and promoted by denying the industry a timely opportunity to meet raw material shortage.
Amir pointed out that a consecutive third year of Punjab crop failure shows the efficiency level of cotton research institutions, causing severe losses to the entire value chain of the Textile Industry. In Textile board meeting of last month we were assured of 12.6 million bales but now it seems we were provided wrong estimates as a result of which exports of the country will suffer.
He lamented that making economic considerations subservient to political considerations/rent seeking would only make our external account challenges gravest. "Already, 30 percent of the production capacity has been impaired and delay in important decisions could lead to further erosion of viability of the industry", he warned.
Additionally, he lamented the fact that the government has still not restored 28 percent system gas supply to the textile mills in Punjab during this winter. Textile industry is unable to figure out its energy cost for the month of December 2017.
The existing RLNG price is $10.22 dollar, which translates into Rs 1,124 per MMBTU for the textile mills in Punjab against Rs 488 per MMBTU in other provinces. Punjab simply cannot operate at such cost differentials! He said these two pending issues are hurting the Punjab-based textile industry as neither the cost of doing business has been reduced nor raw material is being made available at international prices.
He said it would be difficult to sustain export growth momentum of 10% achieved with so much effort in last 5-months with such Government apathy. He appealed to the Prime Minister, Textile Minister and Chief Minister Punjab to take stock of the situation and ensure level playing field for exporting textile industry in Punjab.