Drab government textile policies keep exports in tatters

LAHORE: Blame game continues in the textile sector, as millers pin dismal performance on the absence of state facilitation, Trade Development Authority of Pakistan (TDAP) chairman calls out the government for not prioritising exports, and the apparel sector accuses millers of limiting product base.

Textile exports have been going down for the last two years, though an increase of 9.25 percent was recorded in November 2016 from the lower base of the corresponding month in 2015. All textile associations have been highlighting their plight through media and advertisements.

The basic textile sector comes up with different sets of demands and the wishes of the apparel sector are quite the opposite. Millers want zero duty on cotton imports but duties on all types of yarns and fabric. The apparel sector desires no duty on yarn and fabrics that are not produced in Pakistan.

On the government’s side, the chairman of TDAP SM Muneer feels isolated and powerless. During a recent briefing at All Pakistan Textile Mills Association (Aptma) he lamented that the export development fund meant for use by TDAP was under the control of the Ministry of Finance.

He felt disappointed that he was left out of a high level meeting held Thursday in Islamabad to discuss matters relating to exports.

The meeting chaired by the Prime Minister was attended by Finance Minister Ishaq Dar, FBR chairman and other high officials. Pakistan's overall exports have declined by around 25 percent since SM Muneer assumed charge.

The TDAP chairman pointed out that the decline in exports was due to global recession. He said last year Pakistan's exports declined by 14 percent while there was a dip of 18 percent in Indian and 12 percent in Chinese exports.

This assertion opposes Aptma’s claim that only exports from Pakistan are falling while that of India are increasing. However, the Aptma leaders did not dispute the export statistics that TDAP chairman gave at Aptma House Lahore.

The chairman of the trade authority said that due to neglect at the highest level, exports have not benefited from the improved macroeconomic indicators of the country.

One point on which all the stakeholders agree was the high cost energy and power. They contend that they are not prepared to bear the losses suffered by the power distribution companies on theft.

They want industries to be excluded from surcharges levied to cover inefficiencies and theft. If this plea is accepted, then the entire burden would fall on domestic consumers, a majority of whom are honest. Nobody is pressing the state to shun corruption in the power sector to ensure relief across the board.

The stakeholders complain of high cost of doing business. This again is an administrative issue as there are no flaw in rules and regulations but the devil lies in execution.

In case of refunds, some stakeholders started bribing the officials for early release of refund dues. After a while, speed money for refunds became a norm and the rates also started increasing.

The turmoil in the textile sector is more due to conflict of interest among different subsectors of textiles and within the textile entrepreneurs operating in Punjab and other provinces. When the federal government announced reduction of Rs200 per mmcfd on industries using natural gas last month, the Punjab based industrialists opposed the move, as they were not the beneficiaries.

They were producing power from RLNG that is imported regasified gas and its rate is subject to fluctuations of crude oil rates in the global market. The decision to benefit the industries in other provinces was withdrawn and the facility was passed on to the independent power producers operating on gas.

This does not in any way mean that we should shift all the blame on the textile stakeholders. The government policies were also flawed.

For instance, the use of manmade fibres was restricted in Pakistan by maintaining high import duties on all manmade fibres. This was done to protect domestic polyester fibre industry.

Even manmade fibres that were not produced locally were subjected to non-refundable import duty even on exports. This resulted in restricting the domestic textile industry to cotton only.

Globally 75 percent of textile fabrics are made from manmade fibres.

This is the reason that product range of our textiles is restricted to 10-11 items, whereas Bangladesh’s textile product range is over 200 items. We cannot enlarge our product range on the current policies.