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Surge in local yarn prices hits apparel sector

Published on 25th July, Edition 30, 2016

 

PRGMEA appeals govt to abolish additional regulatory duty on cotton yarn

Pakistan Readymade Garment Manufacturers and Exporters Association (PRGMEA) is the premier trade organization representing the Readymade Garment Industry in Pakistan.

PRGMEA was established in 1981 to provide advice and services to manufacturers and exporters and to promote a better environment for trade. As a trade organization, it is recognized by the Government of Pakistan and affiliated with the Federation of Pakistan Chamber of Commerce & Industry (FPCCI), and with the Employers’ Federation of Pakistan.

The cotton yarn prices have increased by around 25 percent to Rs11,500 per bag of 100 pounds from Rs9,950 during the last one and a half month due to cartelization of local manufacturers who are taking advantage of 10 percent additional regulatory duty on import of yarn.

Pakistan Readymade Garment Manufacturers and Exporters Association (PRGMEA) chief coordinator Ijaz Khokhar said that price of ‘10 count single yarn’ has increased by almost 25 percent and same is the case with other varieties of yarn including ’16 count 30 yarn’ and ‘16 count 20 yarn’ the rates of which have also been raised with the same ratio.

PRGMEA Chief Coordinator asked the government to take preventive measures, as the export target of $25 billion could not be achieved in last fiscal year of 2015-16 due to high energy cost and discriminating import duties on industry raw material.

PRGMEA appeals the government to abolish additional regulatory duty on cotton yarn that should be imported freely from anywhere, as it is hitting the whole value-added apparel sector especially due to limited availability of cotton, which is being exported without any hindrance.

The government should also impose ban on export of raw cotton and cotton yarn for a short period till the arrival of new crop to rationalize the rates of yarn in local market.

As apparel sector already has a very limited production line owing to lack of latest fabric varieties at local level the harsh duties are resulting into significant decline in apparel export, he added.

 

Ijaz Khokhar said that apparel industry is already suffering with the low productivity due to shortage of cotton, high energy cost, and discriminating import duties on the industry’s raw material.

He asked Prime Minister Nawaz Sharif to personally direct policy makers to work for reduction in all input costs, otherwise the export-oriented industries would not only close down their operations, but millions of workers would also lose their jobs.

He said that the Prime Minister had committed to hold meetings with export-oriented industries on quarterly basis, but no such meeting was held so for, leading to decline in export massively.

“We don’t see any improvement in present scenario rather decline in export will be further aggravated as textile ministry is operating without its minister.”

He said the government should take drastic steps for enhancing exports and addressing the problems of the industrial sector as the top priority.

The value-added textile industry demands the government to appoint textile minister immediately, as uncertainty is negatively affecting the whole textile sector which contributes more than 54 percent share in total exports of the country. He said that textile has become the most important sector especially after grant of the GSP Plus status by the EU countries, as 80 percent items, having free market access, relate to this sector and it needs an extraordinary focus.

Ijaz Khokhar said that all the regional competitors including India, China and Bangladesh have separate ministries of textile and Pakistan must follow the suit.

PRGMEA strongly feels if the Ministry of Textile Industry is given full powers and minister is appointed immediately, it can alone, in consultation with the stakeholders, reduce trade deficit by enhancing textile exports sharply, observed Ijaz Khokhar.

“We appeal the government to address value-added textile sector’s problems, warning of further decline in exports due to massive decline in cotton production, and high import duty on yarn.”

It may be noted that Pakistani exports to EU countries are 60 percent in euros and 40 percent in dollar terms, according to Pakistani exporters, and thus a strong dollar vis-a-vis euro does negatively impact on 40 percent of our exports. The recent gain of dollar against euro from 1.34 to 1.7 has been a blow for Pakistan’s exports to EU countries.

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