November 18, 2003	Tuesday	Ramazan 22, 1424

KARACHI, Nov 17: Mounting complaints of the domestic value-added sector on scarcity and rising prices of yarn because of increase in its export volume may force the government to have a hard look at its “free import and free export” policy and force it to consider of enforcing some sort of tariff or administrative measures to check yarn export.

A few associations of textile exporters have already demanded of the government to consider levying 10 per cent duty on yarn export. Alarmed on this orchestration of demand for restriction on yarn export, the big shots in spinning sector are mobilising their ranks and file again after finding that the new leadership of All Pakistan Textile Mills Association (Aptma) was unable to deal effectively with political power of the growers. “The Aptma leadership may prove to be as much ineffective against the leaders of value-added sector also,” a leading spinner in Karachi expressed fears.

Even the officials have now brought down estimate of cotton crop from 10 million bales to 9.55 million bales and ginners believe that it may hardly be 9 million bales. The synthetic fibre sector has also taken advantage and increased the prices of polyester fibre which has raised the prices of man-made fibre also in the domestic market.

An increasing trend in yarn export has already been set in during the month of October. Market sources say that there is no respite in yarn export increase in November. The local value-added sector is literally starving of its input and reports suggest that if government fails to take any remedial measure, many small units of value-added textile may be closed down in coming weeks.

The government is expected to take a stock of textile industry’s situation at the end of December when cotton crop would have been picked and final figures of crop size would be available. The real impact of increasing prices of cotton and yarn on textile industry would be very clear then.

Closure of towels, bedwears and garment units may render hundreds of persons unemployed which the beleaguered Jamali government can hardly afford at this point of time when annual report of State Bank of Pakistan has already exposed government’s claim of reversing the poverty trends. And also the opposition political parties are flexing their muscles to test power and strength of Jamali government.

Well placed sources in government reveal that officials find it difficult to monitor the cotton consumption and yarn production in local spinning industry because textile mills tend to conceal their data. Early this month when stakeholders of cotton and textile sectors held meeting with three federal ministers in Islamabad, the Commerce Minister Humayun Akhtar is reported to have sarcastically inquired from spinners as to why they never disseminate their actual figures of cotton consumption and yarn production.

Under the law, all textile mills are bound to give Textile Commissioner’s office the data on the number of installed and operational spindles and rotors, cotton consumption and production of yarn.

But as many as 203 textile mills out of 453 textile mills never report their performance to the government. Only 159 mills supply their data and there is no method to verify the figures of these reporting mills. Total capacity of these so-called 453 reporting mills including those which default, is found to be 9.2 million spindles and 147 thousand rotors.

Textile watchers say that as many as one million spindle installed in small units of a few thousand spindles each, operate in the informal sector. It is through these small un-registered spinning units that owners of big spinning units take advantage in evading sales tax and concealing figures.

Now that the price of 20 counts single has risen to Rs620 a bundle the value-added sector has been compelled to meet export orders obligation even at loss or at par. “At stake are future orders,” Azhar Elahi a leading textile operator said. He said that buyers are not obliging Pakistani textile orders to absorb the price rise of local inputs.

Government agencies are reportedly watching the situation closely. “If yarn export increases over last year, then measures like fixing quota or imposing export duty on yarn may need to be considered,” a well placed source in Industries ministry said.

Officials said the option to eliminate 5 per cent duty on yarn import and 25 per cent duty on import of cloth was considered for the value-added export. “It was ruled out because the value added sector enjoy duty free import under existing arrangement,” an official said who pointed out that a blanket withdrawal of these import duties on yarn and cloth could have disastrous impact on the local industry. Even now the foreign-made cloth has swamped Pakistan market in a big way and any relaxation will push out whatever Pakistani cloth is being sold in domestic retail outlets.