04 March 2005	Friday	22 Muharram 1426

KARACHI, March 3: The Pakistan Leather Garments Manufacturers and Exporters Association (PLGMEA) on Thursday took strong exception of the rising trend in six-month treasury bills (TBs) yield that has touched 5.18 per cent.

In a statement issued here, PLGMEA Chairman Fawad Ijaz Khan said that higher TBs yield would result in increasing the export refinance rate to 6.5 per cent from next month, hard hitting exporters.

Mr Khan said that refinance mark-up was a major expense of exporters and any increase in this expense would disturb the costing, rendering them uncompetitive in the world market.

"The cost of other utilities like fuel, electricity and gas are also rising sharply, inflating the cost of our export products. Leather garment exporters have already negotiated orders for the current season and now they do not have any option to increase their prices," he added.

Consequently, he said the exporters would incur significant losses and their already depressed exports would be further jeopardized. The l1eather garment exports declined by more than 28 per cent to $132 million during July-December 2004, as compared to $185 million during the same period last year.

Mr Khan appealed to the State Bank Governor to consider the issue seriously in the interest of country's exports. He urged the governor to de-link the export refinance rate from the yield of six-month TBs.

The PLGMEA chief suggested that the export refinance rate should be fixed between three and four per cent at least for the year 2004-05. However, he appreciated the SBP decision to limit the sale of six-month TBs to Rs15 billion against the demand of Rs71 billion in order to check further increase in the TB rate.

The rate of 5.18 per cent for six-moth TBs, he said, was very high and a 6.5 per cent export refinance rate from next month was not at all feasible for exporters.