KARACHI, April 26: The Karachi Chamber of Commerce and Industry (KCCI) has foreseen problems of extreme intensity for the domestic textile industry in view of phasing out of textile quota in 2005, opening of free market and challenges with China, India and Korea.
The KCCI feels if timely measures are not taken to face the future challenges then the country’s main contributor to the economy will collapse.
Country’s textile industry is now engulfed in six main problems like low productivity of textile workers, under utilisation of installed capacity, sub-standard production, unplanned, uncoordinated and slow expansion and modernisation of industries, outrageous charges of utilities and exorbitant cost of financing.
The Chamber, in its budget proposals for the year 2003-2004 to the federal government, stressed that the first three issues can be tackled by the textile industry while other issues can be resolved with the help of government in consultation with the industry.
The KCCI says that in 60s and 70s, Korean cotton textile was virtually non-existent, Chinese were in its infancy and Indian, despite larger production, had nominal edge over Pakistan.
“Currently, Korea is leading in super fine micro fibre products, China is expanding its weaving capacity by swallowing all available jet air looms in the market and India is warming up to successfully challenge the giants as well as the pygmies in textile field,” the KCCI observes.
Price of every single item produced in Pakistan is inflated due to very high utility charges. Cost of electrical unit in other countries ranges from $0.03 to $0.05 per unit as compared to $0.10 in Pakistan. The KCCI urged the government to subsidize the electricity charges by $0.03 per unit.
On cost of financing, the KCCI proposes that industrial credit for expansion and modernisation be made available against security at rates not exceeding six per cent per annum. There should be total exemption of duty and sales tax for the import of textile machineries besides providing exemption on import of dyes and chemicals. Sales tax refunds should be made within a week instead of months.
On other issues, the KCCI has given a list of 74 items prone to smuggling. It is suggested that the rate of customs duty on smuggling prone items, not manufactured locally, be fixed at five per cent whereas the items manufactured locally, 10 per cent rate of duty be imposed.
The KCCI says that the rate of 15 per cent general sales tax should be brought down to 7.5 per cent in the upcoming budget as the high rate of GST is promoting tax evasion and smuggling.
On income tax, the Chamber says that the entire income tax collection of Rs125 billion is shared by trade, industry and the salaried class whereas industrial sector is contributing 18 per cent of the GDP. All the segments of the society including agriculturists should be brought into the tax net.
The KCCI has urged the government to remove the Rs1,000 per ton of central excise duty on cement. There is also a sales tax of 18 per cent. Over 55 per cent of selling price comprises government taxes.
The percentage of taxation on cement in Pakistan is 37 per cent as compared to 18 per cent in India, 10 per cent each in Indonesia and the Philippines, seven per cent in Thailand and nil in Iran. Thailand has the highest per capita consumption of cement at 447 kg as compared to 65 kg in Pakistan, 97 kg in India, 95 kg in Indonesia, 168 kg in the Philippines and 322 kg in Iran.
