APTMA appeals for bailout package for textile industry
All Pakistan Textile Mills Association (APTMA) Chairman SM Tanveer has appealed to Prime Minister Nawaz Sharif and Finance Minister Ishaq Dar to announce a bailout package for the textile industry.
“Serious textile industrialists are planning downstream integration to add another $13 billion to the exports and help the country to get rid of loans from international donors at 8 percent markup,” he added. “An increase of $13 billion export in next three years would create another 13 million jobs in the country.” He said the prime minister had himself agreed in a five-hour-long meeting with the textile industry associations on September 11 that Pakistan’s textile industry has been lagging behind in the region and he had assured he would announce a package for it within five days.
The industry was eagerly waiting for the announcement of the package from the prime minister, Tanveer said, adding that the high cost of doing business was constantly resulting in the closure of textile units. Therefore, the prime minister had directed to reduce the power tariff by Rs 2.15 per unit soon after the meeting when the textile industry associations had advocated supply of electricity at 9 cent per unit in line with regional competitors. However, he lamented that in a situation where the textile industry was not viable on Rs 13 per unit, the mills are paying for electricity for the current month at Rs 18 per unit.
It is ironical that the industry is vying for Rs 9 per unit electricity, while the power distribution companies have issued Rs 18 per unit electricity bills, the APTMA chairman said, adding that the textile industry had been sustaining losses over the last one year and the mills are facing problem in paying salaries to their staff. Besides, he stressed, the imposition of Rs 200/MMBTU gas infrastructure development cess with retrospective effect has added fuel to the fire. The issue is yet pending with Supreme Court after a decision in favour of industry from the higher courts. “The government should immediately implement the Senate Committee on Textile Industry recommendations on the GIDC issue,” Tanveer demanded.
He further proposed the government impose 20 percent regulatory duty on the import of textile raw material right from yarn to garments. It would ensure an early revival of the industry, he said while noting that the domestic textile industry has a potential of $7 billion per annum, which is being marred by the unbridled entry and dumping of the highly subsidised textile products from India and China. The import duty on textile products in Pakistan was merely 5 percent against 30 percent in the competing countries. “It needs an immediate upward revision,” he said.
The government should also announce a rebate on the textile exports as an incentive under the focus market policy even if it was unable to devalue the rupee against dollar, Tanveer said. “The competing countries are already offering heavy rebate on exports,” he added. A production capacity of $3.5 billion was already dormant, while another $2 billion capacity was under a severe threat of closure in case no immediate revival takes place with the intervention of State Bank of Pakistan, Tanveer said while suggesting the government constitute a joint committee of APTMA and the SBP to deal with the situation.
He also said this step would boost investors’ confidence to fetch new investment through BMR and secure the export orders. He said an uninterrupted energy supply on priority was a must for the textile industry, but depressing reports are emerging every now and then that there would be no gas available to the textile industry in coming winter. “Such an uncertain situation would make it difficult for the industry to get export orders for the upcoming fall and winter season. Therefore, it is time to ensure energy supply to the industry on regionally competitive price.”
The APTMA chief assured the government would be in no need of seeking $500 million from the IMF in case it revives the textile industry and enables it to earn foreign exchange out of domestic sources. He expressed the hope that the prime minister and the economic managers would understand the severity of the situation and announce a textile package before Eid.