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Textile goods losing domestic market?
By Sabihuddin Ghausi
WHILE the textile industry continues lobbying for more
concessions and incentives - cash subsidies, discount-rated
bank loans, cut in utility tariffs etc. - for the third
consecutive year, it also wants the government to keep a check
on the import of second hand clothing as it will create room
for finished products in the domestic market.
 “Hardly
15 per cent of finished textile products are absorbed in the
domestic market,” Mr Adil Mahmood, the Chairman of All
Pakistan Textiles Association (APTA), informed Dawn by
telephone from Lahore. The APTA is a breakaway group of the
All Pakistan Textile Mills Association (APTMA). But APTA and
APTMA are convinced that their industry is not getting enough
support from the domestic market as it is in India where 70
per cent finished products are absorbed by local buyers And in
case of China, it is 60 per cent.
“With a population of one billion plus, India imports hardly
24,000 tons of old clothing in a year'' APTMA Chairman Shafqat
Elahi Sheikh said on telephone from Lahore. According to
official statistics, the total quantity of import of worn
clothing and other worn articles was 24.51 million tons in
Pakistan worth Rs436 million. A year earlier, total import of
worn clothing and other items was only 20 million tons worth
Rs368.41 million. Textile industry leaders are convinced a
“mafia of importers of second hand clothing and custom
officials'' connive to under invoice and miss-declare import
consignments. The actual import of second hand clothing is
much higher than the official figures. Bed sheets, curtains,
tapestries and a variety of home textiles are being brought as
second hand clothing, they allege.
Local textile industry leaders reckon that total market of the
second hand clothing and other items is in no way less than
Rs10 to 12 billion. They say more than 130 million people are
hooked on to all sorts of imported stuff including second hand
textile goods. An over whelming majority wear shalwar-kameez
that is not imported as second hand clothing but cloth is of
different varieties is coming from official channels from
China, India, Indonesia, Bangladesh, Thailand and many other
countries. Then people who are in Rs10,000 to Rs20,000 earning
bracket also use imported curtains, bed sheets, tapestries and
other decorative textile items.
In his meeting with Dr Salman Shah, Prime Minister's Adviser
on Finance early last week, the APTA Chairman Mr Adil Mahmud
raised the issue of second hand clothing import with an
implied request to put some sort of check on it. It was turned
down as any restriction on second hand clothing in an election
year is bound to evoke hard feelings among the poor. “No
government would like to be blamed of depriving the poor of
their clothes after causing an unprecedented hike in prices of
food items for the third consecutive year'', says a local
textile representative.
Pakistan's textile products are found to be much more
expensive compared to imported clothing in the market. An
average imported quality shirt can be purchased from Rs100 to
Rs150 as against locally made shirt at Rs300 to Rs400 a piece.
A good quality trouser is sold at Rs150 to Rs200 as against
locally made trousers at Rs500 and over. Not only the cloth is
expensive but stitching too is costly that forces buyers to
opt for imported second hand clothing. The market for
expensive textile clothing shrinks because of low purchasing
power of the poor. Almost 74 per cent people live on two
dollars a day or less than Rs4,600 a month and quite a
substantial number of remaining 26 per cent are also not
enjoying a very enviable quality of life.
“We can provide jobs as well as textile products at affordable
price to our people'' says Mr Adil Mahmood, who wants a proper
business, a low production cost environment and government
support to get access and also firm foothold in the foreign
markets. He questions the assertion being made in certain
quarters that textile export is becoming un-feasible for
people because of the cost being incurred on account of cash
and subsidies on bank loans.
The State Bank of Pakistan reported $9 billion textile export
during 11 months, July 06 to May 07. In May, a SBP handout
informed the public of total disbursement of Rs328 billion
under export finance scheme (EFS) and long-term financing for
export-oriented projects (LTF-EOP). “The year 2007 reflects
record high level refinancing support ever provided by the
State Bank'', the handout pointed out.
The growth in refinancing (LTF-EOP) of Rs43.8 billion during
July 06 to April 07 was creation of new money, the SBP
reported.
The SBP paid Rs2 billion subsidy on refinancing to textiles.
In addition Rs16.4 billion subsidy was paid in respect of
research and development rebates offered at the rate of six
per cent, five per cent and three per cent to various segments
of textile.
Excessive refinancing in 2006-07 diluted the SBP's monetary
tightening stance and the excess liquidity. The State Bank
called its support for textile “extensive and substantive''
over the last many years.
Then as a punch line, the State Bank observed that those
textile operators who have been able to develop their niche in
markets and continue to compete in international markets have
been able to make a mark.
In last two years, the government offered support to all
segments of textile sector but spinning was left out. It was
neither given research and development rebate, nor concession
rated bank loans. The perception is that for last almost 50
years, spinners got cotton almost at half the rate of world
price. Now that growers are also a powerful segment of
political power structure, the days of export duty on cotton
or fixation of a minimum benchmark price of cotton export is
over. Now the spinners get cotton on market prices and find it
difficult to adjust to new conditions.
The spinners now want five per cent R &D rebate and bank loans
at 7.5 per cent.. “It is for the government to close down
spinning in Pakistan'' a local leader said who pointed out
that in the event of closure of spinning, the government will
export cotton at 70 to 80 cents a pound and import yarn at
$1.20 to $1.40 a pound for value added sector. “Let's see how
viable this business is'', he remarked.
“We have neither cut down on rebate rates nor withdrawn the
refinancing facility,'' a senior official in the Federal
Textile Ministry said from Islamabad. Instead of short-term
solutions, the official said the government is now focussing
on designing a long-term policy of 10 to 15 years. The policy
will have specific projects to make all segments of textile
viable on a long -term basis. “We do not want industry to be
on crutches, it should be strong enough to face all
weathers,'' he said. The federal textiles minister and senior
officials are expected to be in Karachi on Monday to hold
another round of talks with top textile leaders.
Courtesy: DAWN
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