November 6, 2003	Thursday	Ramazan 10, 1424

KARACHI, Nov 5: After more than a month of the emergence of the cotton crisis in Pakistan, Commerce Minister Humayun Akhtar Khan is holding a meeting with all stakeholders of cotton and textile business on Thursday in Islamabad to discuss the issue.

Cotton prices started crawling up late September in the local market after reports of damage to crop from heavy infestation and spiralling of international cotton prices. Domestic cotton prices shoot up from Rs2,600 a maund in the last week of September to a record peak of Rs3,500 a maund this week.

It took more than a month for the commerce ministry to wake up from deep slumber.

All Pakistan Textile Mills Association president Waqar Monnoo and Federation of Pakistan Chambers of Commerce and Industry president Riaz Tata confirmed that they had received invitation to meet the commerce minister.

Unconfirmed reports suggest that Prime Minister Mir Zafarullah Jamali is also expected to meet the leaders of cotton growers and ginners and the leaders of textile industry on Monday (Nov 10) to discuss the cotton issue. The prime minister’s meeting was earlier scheduled on November 4 but is reported to have been put off because Finance Minister Shaukat Aziz was not in the country.

But leaders of the value-added sector want a separate meeting with the government to sort out their problems arising from the unprecedented price spiral of cotton and yarn.

“At stake is delivery of export orders of at least $3 billion with the manufacturers and exporters of towels, readymade garments, knitwear and hosiery and a few other sectors,” Riaz Tata told Dawn on Thursday.

With prices of cotton ranging between Rs3,300 and Rs3,500 a maund and that of yarn beyond Rs700 a bundle in the domestic market and there are reports of shipment freight increase, Riaz Tata fears the delivery of $3 billion export orders for textile products is in jeopardy. He said the textile exporters had been left gasping after reduction of rebate rates to 1.5-2 per cent from 8 per cent in 1999. “This reduction in rebate rates have come in wake of about 10 per cent appreciation of rupee value with the dollar,” he said.

“Spinners have a strong lobby in the legislatures as well as in the civil service. The growers enjoy tremendous clout and influence with this government,” he said, while speaking on behalf of all the textile associations. Mr Tata said the manufacturers and

exporters of garments, towels, bedwear, knitwear and hosiery and other sectors were virtually without any patron in the government and their voice had always remained unheard.

Compared to growers and spinners, the manufacturers and exporters of towels, readymade garments, bedwear, knitwear and hosiery are small businessmen with no big investment. But value-added business enterprises are labour intensive and big foreign exchange earners and there is a lot of stake for this government.

Mr Tata said the entire cotton and textile industry earned $7.7 billion. The export earning from cotton, yarn and cloth is hardly $1.7 billion and almost $6 billion foreign exchange is earned by readymade garments, bedwear, hosiery and knitwear, towels and other textile sectors.

As an immediate relief the FPCCI, Aptma and value-added textile sector want removal of sales tax on entire cotton and textile chain. “Almost 93 per cent sales tax on cotton and textile chain has to be refunded because of the exports,” Shabbir Ahmad, leader of bedwear exporters, said.

He said the cost of refund for the textile exporters and manufacturers was two to five per cent of their stuck-up amount of sales tax and there is a perpetual cash flow problem. “The only beneficiary in the system are the functionaries at the sales tax directorate,” a textile exporter remarked.

Riaz Tata wants the restoration of 1999 rebate rates on textile products export for at least next six months so that the exporters get some breathing space for their business. “India, Bangladesh, Malaysia and other countries offer good rebates to their textile exporters,” he said.

He warns that if Pakistani exporters are pushed out from the markets by their competitors then perhaps “we would never be able to go back,” he said.