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Thursday December 08, 2022

Textiles look to Dar to drive exports

October 01, 2022

ISLAMABAD: The textile industry on Friday pleaded with the new Finance Minister Ishaq Dar to ensure the regionally competitive energy tariff (RCET) remains intact to facilitate sector’s imports of spare parts and raw materials that are critical for export growth.

All Pakistan Textile Mills Association (APTMA) on Friday wrote a letter to Finance Minister Mr Ishaq Dar asking for the continuation of RCET and mechanism for smooth imports of spare parts and raw material to keep the trajectory for exports on the higher side.

APTMA also sought time from the finance minister to discuss the critical issues the textile sector is confronted with. “The RCET’s continuation is the key to massively increasing the textile exports by over $7 billion during the last 2 years from $13 billion to $19.35 billion and is all set to further increase by $5 billion in the current financial year,” the APTMA said in its letter.

“The target of more increase in exports by $5 billion, the country can achieve if the government ensures the continuation of the RCET for the export industry.”

The letter addressed to the finance minister mentions that the availability of RECT across the entire value chain has to be maintained and assured as Pakistan’s textile industry is fragmented.

It said international products could only remain competitively priced if RCET was available to the entire chain.

“The efficacy of these tariffs can be gauged from the impressive growth in the industry.”

APTMA highlighted the fact that the cost to the national exchequer of maintaining RECT over the last four years had been 2.67 percent, making these export dollars the cheapest sustainable source of foreign currency.

“So the continuation of RCET is essential for this growth momentum to be sustained.”

While mentioning the critical imports of spare parts and other raw materials needed for the increase in exports, the industry says that it has been reiterating to the State Bank of Pakistan for quite a long time about pending cases of a large number of critical imports of machinery and raw materials for textile mills. APTMA said that so far the central bank had not updated the industry about requests made to this effect.

“And now the industry is in great difficulty because of the shutting down of mills as a consequence of these delayed approvals,” the letter added.

The letter also underscores that the matter requires urgent resolution as the delayed imports are translating into huge financial losses to not only the importers but also the national economy in terms of lost production and exports.

Moreover, SBP is stating that they will release for imports under the chapter 84-85 only to direct exporters and indirect exporters are neglected, which is a matter of grave concern as indirect exporters provide intermediate goods to exporters, and without these intermediate goods, exports are now suffering and will drop significantly over time. APTMA also maintained that the delay in opening LCs for machinery parts and outrightly neglecting indirect exporters had resulted in the shutting down of textile mills via curtailment of production of goods for exports and would further cause the firms and national economy to suffer.

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