A number of textiles garments units have closed
Oct 08 - 14, 2001
Despite open assurance extended by the US and the
EU to boost cooperation with Pakistan, the promised tangible results
on Pakistan's economy have not come to light so far.
The war risk premium levied by the liners is being
viewed with concerns by the Pakistani shippers who fears that such
steps would seriously erode margin for Pakistan business. Although the
Export Promotion Bureau (EPB) has taken up the issue for withdrawal of
war risk insurance, but the trade find it just eyewash unless
something practical is done on this front.
Nadim Maqbool, Chairman APTMA while talking to PAGE
said that it is too early to estimate about the possible losses as a
result of Afghan related situation, however the major concerns of the
textile industry are including negative image of the country,
introduction of war risk insurance and above all the slow down in the
US looming large over Pakistan products. The recession in the United
States would certainly affect industry in Pakistan.
He however attached importance to the visit of
Commerce Minister Razzak Dawood currently in the United States in the
relation with the hardships and problems confronted to the textile
sector due to the current situation. He expressed the hope that visit
may bring something positive for the local industry.
The textile industry has also expressed its dismay
and concerns over what they called double-edge policy of the
government regarding purchase of cotton and sell it off at the cheaper
They said that the Trading Corporation of Pakistan
(TCP) has recently lifted cotton from the market at the higher rates
and exporting it at the cheaper rates. They said that cotton-growing
countries harvested a rich cotton crop this year producing a surplus
of over 80 million bales available in the export market. The adequate
cotton supplies have brought down the cotton prices in the
international market. The TCP is selling cotton cheaper than the
prices. As a result of this on one hand the TCP is strengthening the
hands of the textile competitors while depriving the local textile
industry of the local resources on the other hand. It is amazing the
benefit of higher price paid by the TCP is not passed on to the
growers instead the booty is grabbed by the middle man or the ginners.
The industry feels that mechanism should be evolved that maximum
benefit should reach to the grass root level so that the growers could
get a better price of their hard earned crops.
The problems being faced by businessmen,
particularly exporters, as a result of terrorist attracts in USA were
highlighted at a representative meeting held under the chairmanship of
Iftikhar Ali Malik, President FPCCI.
It was pointed out that Pakistan's trade with
Afghanistan, amounting to around $156 million annually and
continuously increasing since 1996-97 would receive a major setback in
case US attack that country.
The FPCCI president informed the meeting that
foreign buyers have cancelled export orders given prior to the attacks
and there was no renewal of these orders by the foreign buyers despite
it being buying season. Further many export orders of textiles and
leather goods have been shifted to other Asian countries.
The meeting was informed that due to decline in
exports of textile products particularly to USA and future being
uncertain, a number of textiles garments units have closed down. The
closure of textile units is resulting in unemployment, though at a
small scale at the moment but likely to expand if the situation gets
There are rumors of 'hate Pakistani products'
campaign in USA, which is a major buyer of Pakistan products.
Exporters are also facing difficulties in getting visa of USA and
other European countries for undertaking visit to those countries for
promotion of business and exports.
Many foreign buyers used to visit Dubai for holding
business negotiations with Pakistani exporters and placed order there.
Now Dubai has stopped grant of visa to Pakistanis due to which the
exporters are finding it hard to go to Dubai for any business deal.
Leather industry, a major contributor to Pakistan's
exports feel that falling dollar would hit hard the leather exports
which are already under pressure due to several problems at home.
He said that outstanding sales tax and customs
rebate claims of crores of rupees are stuck up with the respective
collectorates and as a result exporters are facing acute liquidity
shortage and their production is badly affected rendering them unable
to comply with export orders. Due to lack of funds, the exporters are
constrained to obtain refinance from banks, which is still on the
higher side despite reduction from 13 per cent to 12 per cent. The
refinance rate should be further reduced to 6 per cent to enable
exporters to accelerate the quantum of exporters.
Exporters have expressed serious concern over what
they called fall in the value of dollar against rupee which would
adversely affect export proceeds on previous sales contracts made on
the higher dollar rate.
They have demanded of the SBP to compensate them
for the loss accruing from lower value of the dollar.