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August 30, 2015

Duty on exports may hurt cotton prices: stakeholders


August 30, 2015

KARACHI: Cotton prices in Pakistan are likely to decline, if the government considers increasing the regulatory duty of 10 percent on export of raw cotton, stakeholders told The News.
Chairman Standing Committee on Commerce, Siraj Mohammad Khan, in a meeting with businessmen in Karachi on Friday, said the committee would recommend an imposition of 10 percent regulatory duty on export of raw cotton, as its exports have increased last month by around 70 percent affecting the local textile industry.
According to statistics of Pakistan Bureau of Statistics (PBS), during July, 2015 over July, 2014 overall exports have declined by 16.90, textile group declined by 11.72 percent, bedwear declined by 21 percent, towel declined by 9.01 percent, knitwear declined by 8.20 percent and readymade garments declined by 6.14 percent.
However, exports of raw cotton shot up by 67.73 percent, cotton combed or carded shot up by 100 percent.
On one hand, supporters of free trade and growers believe that export of raw cotton will benefit them but exporters of value added sector have expressed concern on an increase in the export of raw cotton. Currently, there is no duty over export or import of raw cotton.
An official of All Pakistan Textile Mills Association (APTMA) said Pakistan is also importing cotton along with the exports. The imported cotton is of high quality and the yarn produced out of it is mostly exported. “Some people will never give up the use of imported cotton, while with the imposition of duty on the exports, prices will come down and ultimately the growers will suffer,” he added.
Muhammad Jawed Bilwani, Chairman Pakistan Apparel Forum (PAF) and Chief Coordinator Value Added Textile (VAT) Forum said the export figures show that value added textile exports have declined alarmingly.
He said there is no sign that the government is concerned about this serious matter and preparing to save exports. “It is a fact that globally exports of raw

materials are discouraged and value addition is given all facilities and incentives,” he said.
Although, the benefit of cotton export was not transferred to the growers as per their claim, but they said the limit on exports might hurt them.
Abdul Majeed Nizamani, President Sindh Abadgar Board said only the government would benefit from the duty on cotton exports.
“Duty on exports should not be enhanced at the level where the exporter passes the duty to the growers as it will hurt them.”
He said price of cottonseed reached Rs 2,200 per maund in Sindh, which should have been near Rs 3,000 per maund.
Growers were already suffering while surplus cotton should be allowed for the exports and should not be discouraged with regulatory duties, he protested.
Pakistan exports an average of 600,000 bales annually from a crop of around 14.0 million bales.
“The size of exported cotton is very small,” said Haji Shakoor Dada, a cotton exporter. Import and export of cotton is free under the policy of the government and should remain as such, as the country needs foreign exchange, he said.
Pakistan imports around 2.0 million bales annually.
Dada said the import of cotton in bulk quantity showed its prices were lower than Pakistani cotton otherwise the traders would have purchased the local lint.
Instead of recommending any duty on export of the raw cotton, he suggested, the policy makers should work for an increase in the production of cotton and enhance its quality “per acre yield should be increased.”

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