TEXTILE SECTOR: MAJOR CONCERNS
A number of textiles garments units have closed down.
By AMANULLAH BASHAR
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 rates.
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 worse.
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.