All Pakistan Textile Mills Association (APTMA) on Wednesday said that the first hundred days of the PTI Government led by Imran Khan has already been lapsed and mostly consumed is assessing the terrible economic situation the country is in.
The government is yet to adopt measures to reverse the trend. Drastic situation requires drastic measures.
“APTMA is of the view that if the corrective measures are not taken immediately i.e. in next 30 days the economic situation of the country will become from bad to worse,” Zahid Mazhar, Chairman – APTMA Sindh-Balochistan Region said in a statement.
Pakistan’s present economic situation is miserable and the only answer to come out of the massive fiscal and current account deficits, rising trade deficit gap, unprecedented depreciation of Pak Rupee, highest discount rate in the region and increase trend in inflation is only and only increase in exports.
He said that the only answer to the depressed economic situation is increase in exports and only the textile industry is capable enough to double its exports in the next five years.
“For achieving this issue to meet the threat of increased competition in the global textile market must be addressed without any further delay,” he said.
While highlighting the issues hurting the viability of textile industry of Pakistan to compete with its regional competitors, he said that the some of the major issues are high cost of doing business, inordinate delay in payment of refunds of sales tax, income tax and duty drawback to exporters, highest policy rate in the region, shortage of basic raw material i.e. cotton for meeting consumption requirement of the industry at competitive prices.
Zahid Mazhar further said that increase of 1.5 percent in banks’ lending rate will mean a higher cost of finance to the industry, especially export oriented textile industry because they are facing acute liquidity crunch due to delay in payment of refunds of sales tax, income tax and duty drawback.
Even Refund Payment Orders (RPOs) have not been issued by FBR against the long outstanding refunds, he added.
Zahid Mazhar said that the increase in the cost of doing business cannot be passed on to the international buyers which is resulting in de-industrialization and decline in Pakistan’s share in global textile trade. “In contrast the share of our regional competitors like Bangladesh, India and Vietnam is rising by leaps and bounds,” he added.
He urged the government to give immediate attention to the cotton crop which has witnessed a massive decline over the last few years.
He reminded that four years ago Pakistan had achieved the highest cotton crop of 14.87 million bales of cotton which has now fallen to 10.8 million bales as against the actual potential of 17.5 million bales annually.
Resultantly the spinning industry has to import annually around 4.0 million bales of raw cotton every year to meet its consumption requirement.
“Despite of the acute shortage of cotton, the previous government had imposed 3 percent custom duty, 2 percent additional custom duty and 5 percent sales tax on import of raw cotton, which should be removed immediately without any further delay,” he suggested. He further demanded the government to remove custom duty and anti-dumping duty on import of polyester staple fiber, which is used as a substitute for cotton.
He also requested the government to review Free Trade Agreements and Preferential Trade Agreements in such a way that the exports of Pakistani goods to those countries be increased. He demanded to give special attention towards FTA with China since China is providing zero custom duty facility on import of textiles from ASEAN member countries, while 3.5 percent duty is imposed on textiles from Pakistan.
The FTA with Turkey also needs to be renegotiated to facilitate textile exports to Turkey. He said that SBP has projected economic growth for the current fiscal year to be slightly above 4 percent.
Zahid Mazhar said that the country in an economic situation like Pakistan in order to survive and prosper, has to reach an annual GDP growth rate of 7 percent or more which is only possible if the government immediately starts giving attention to the export sectors and industry specially the textile industry.