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Textile exports to China

Cotton yarn is the leading exportable item from Pakistan

July 23 - 29 , 2001

Pakistan's textile sector is poised to expand its exports to the huge market of Far Eastern countries especially in China and Korea.

The Chinese delegation, led by Chinese Prime Minister, who recently visited Pakistan, has offered to lift the entire production of ten textile mills. The purchase delegation from China is likely to visit Pakistan shortly has rolled out the ball into All Pakistan Textile Mills Association's (APTMA) court to select the textile mills for lifting the entire production of those units.

Mushtaq Ahmed Vohra, Chairman, APTMA (Sindh and Balochistan Zone) while talking to PAGE said that China offers a big market for our textile products, however they have shown interest in buying raw or semi finished textile products from Pakistan with an objective to re-export them after value addition. The European Union countries are doing it. When asked about the pace of progress towards value addition in Pakistan, he said that the actual potential of the textile sector has not been fully exploited in Pakistan. Although the textile sector is already playing a leading role in the exports sector by contributing over 65 per cent of the total exports yet this sector has the capacity even to easily cross the mark of $15 billion or more provided the government duly facilitates the sector.

Regarding increase in exports to China, he said that there was a significant move on the part of some Indian yarn exporters to China. They have offered Pakistan to export yarn of 30 counts and below and India would export yarn of above 30 counts. This mutual understanding would help eliminating the element of harsh competition between the two countries to gain the export market. If the two sides agreed to operate within the stipulated framework of yarn counts, both of them can benefit and fetch good prices of their yarn in the international market in general and from China in particular.

Citing the example of hardships the textile sector is facing, he said that the government has recently withdrawn the export re-financing facility. This step has been taken at a time when the sector is already confronted with acute financial crunch due to non-payment of refunds and duty drawbacks running in billions.

Can any sector engaged with export glorify the business in the face of financial constraints as the candle is burning from both ends for them? At one end re-finance facility is withdrawn while their genuine claims for refunds were falling on the deaf ears for more than one year, he pointed out. He urged the government for restoration of export re-finance facility at the earliest to enable this prime sector to play its due role in strengthening the economy. He also said that unless a smooth and problem free system for refunds and duty drawbacks is brought into practice, this sector will be unable to produce the desired results. He said that as a result of stuck-up refunds for over a year, a number of units have gone out of production. Replying to a question he said that it is not the question of shortage of liquidity with the government, the will of the government machinery for compliance to the good decisions is also equally important to deliver the goods, he remarked.

On the question of quota restrictions, he was of the view that it's a sort of protection for some while it's a barrier for others. The abolition of quota would help those who produce and export quality products while those who take it as protection may not be able to compete unless they upgrade the quality of their products, he observed.

The government however has already taken notice of the situation regarding delayed refunds and payments of duty drawbacks. Federal Commerce Minister Abdul Razak Dawood has said that immediate priority of this ministry to decide all refund cases, settle duty draw back issue and facilitate access of the exporters to potential markets. Regarding withdrawal of the export refinance scheme, he however has said that days of cheaper refinance have gone and other facilities are coming up which should be used by the genuine exporters with due care and diligence. Razak Dawood however said that export of the value added items which was 35 per cent of the total exports in 1995 has reached to the level of 52 per cent of the total exports i.e. $9.1 billion this year. The minister has expressed the hope that the private sector has the potential to excel and hit the export target of $10.1 billion set for the current fiscal.

Meanwhile Korea, another giant of the Asian economies has announced to withdraw anti-dumping investigations on the imports of the combed yarn originating from Pakistan and other countries in the region.

The Korean Trade Commission has decided to terminate the investigation because the applicant of the Spinners and Weavers Association of Korea had withdrawn its application for the anti-dumping investigations on the imports of yarn from Pakistan and other countries.

The exporters have expressed hopes that the termination of investigation for anti-dumping duty would help to increase the exports for South Korea.

Last year Pakistan exported 130.817 million dollars of yarn compared to 109.97 million dollars business in 1999-2000. Cotton yarn is the leading exportable item from Pakistan for several years and its exports has exceeded to over one billion dollars from Pakistan.