Pakistan to miss growth target, Ishaq Dar challenged
LAHORE: Finance Minister Ishaq Dar has been challenged by the All Pakistan Textile Mills Association (APTMA) that his GDP growth target set for the country this year would be massively missed due to dismal state of affairs of the textile industry and closure of 110 mills out of 272 in Punjab.
The challenge was given to Dar at a luncheon meeting with the representatives of Lahore Economic Journalists Association (LEJA) hosted by APTMA Punjab Senior Vice Chairman Syed Ali Ahsan on Monday. The APTMA patron-in-chief Gohar Ejaz besides senior leadership also attended the event. APTMA Punjab Chairman Aamir Fayyaz has apprehended that the GDP growth target is likely to be missed due to dismal state of affairs of textile industry as well as agriculture sector. “For the Fiscal Year 2015-16, the government has envisaged 5.5% GDP growth, comprising 6.4 % industrial, 3.9% agriculture and 5.7% of services sector,” he added.
He said more than 30% of the textile industry’s production capacity is non-operational mainly due to energy crisis coupled with highest tariff, imposition of multiple taxes/levies, lower commodity Prices internationally and non-availability of conducive environment. Fayyaz said the closure of mills capacity worth $3 billion, which constitutes 2% of GDP, and low cotton production this year to 4 million bales with economic loss of $1 billion i.e. 0.4% of GDP.
“Presently, impaired capacity of textile industry has been affecting the overall country’s GDP by above 2%, exports by 16% and employment by 3%,” he pointed out. He said there would be no need to approach the IMF in case the government becomes serious in reviving the impaired capacity of textile industry.
He also deplored that the government was charging 14 cents per unit of electricity when oil prices have dropped to $37 a barrel. He reminded that electricity was available at a tariff of 9 cent per unit when oil prices were at the rate of $100 per barrel.
Former APTMA chairman Gohar Ejaz said the textile and clothing exports are on declining trend since last three years. “The textile exports were around $9 billion when my group took over APTMA in 2009 and we raised it to around $14 billion,” he said and expressed his disappointment over reversal of exports to $10 billion now mainly due to high cost of energy being made available to the industry.
“We are closing the year on a very sad note, as the government does not seem interested in the viability of the industry. What bothers me the most is that each drop of billion dollar exports is resulting to the retrenchment of one million jobs in the industry,” he stressed.
He said despite having GSP+, during FY 2014-15, Pakistan’s total exports are dropped by $1.21 billion i.e. 4.88 % in value terms, mainly due to under performance of manufacturing sector.
“From July to November this year, exports have further declined by 13.81% i.e. $1.37 billion worth of exports loss has been incurred only in first five months over previous fiscal year,” he added.
He said the exports potential of closed mills and impaired capacity is $4 billion within the textile industry value chain, which needs to be arrested.
He further apprehended if the immediate measures to restore viability are not taken on time, the manufacturing sector would collapse. The APTMA leadership also appreciated the role of LEJA in creating awareness among public on economic issues of the country, saying that the economic journalists have made objective reporting of the industry issues in the best national interest. It has further added that the significance of economic reporting has become crucial in the global economy.