KARACHI, April 13: Confusing and conflicting reports are emerging from the readymade garments, hosiery and knitwear sectors, which have been given 6 per cent relief by the Economic Coordination Committee of the Cabinet on Tuesday. Garment exporters report closing down of a number of units and emergence of a large number of small businessmen who thrive on smuggled cloth from China, India, Thailand and Indonesia. Under-invoicing and mis-declaration is another way to bring in huge quantities of cloth and garments in Pakistan. Exporters estimate this trade anywhere from $2.5 to 3.5 billion a year, which has crippled the domestic industry and distorted the home market. They doubt if 6 per cent relief would be enough to salvage the sinking industry.

“I am myself trying to find out the mechanism for 6 per cent relief to be given to the garment exporters,” the State Minister and Chairman Export Promotion Bureau Mr Tariq Ikram told Dawn late in the evening from his office on Wednesday. A telephonic conversation revealed that the EPB Chairman was not in picture of designing a system to salvage sinking garment industries.

“There is no indication how this relief will be offered to us,” Majyd Aziz, a well known garment exporter and a former Chairman of SITE Association of Industry replied to a question.

“The government may offer this 6 per cent relief from the Export Development Fund,” a top branded garment exporter remarked who was unaware of the mechanism designed by the government for this purpose. Yet another exporter disclosed that a high level Committee headed by the Deputy Chairman Planning Commission Dr Akram Sheikh has drawn up a system for giving relief to the readymade garments, hosiery and knitwear producers and exporters.

Many garment exporters believe that relief mechanism will never be made public as it comes into conflict with the open market rules set by the World Trade Organization (WTO) since January 1, 2005. Textile exporters say that China was offering 13 per cent and India 10 per cent invisible and not so visible relief to textile exporters to consolidate their foothold in the international market.

The government has promised to introduce a zero rated tax system from next fiscal year in the whole range of textiles to relieve exporters from the hassles involved in getting refund. In about last three decades, rebates have promoted corruption of unprecedented level in Pakistan’s business, which have made exporters and custom officials millionaires at the cost of public money.

Nurtured on spoon feeding and in a virtual green house environment, Pakistani businessmen find themselves in highly inhospitable and hostile conditions after January 1, 2005 when they are being exposed to open competition. Pakistani exporters are now being asked to meet at least minimum of the social standards that warrant healthy working conditions, wages payment according to the law and bargaining rights to the workers. Efforts are now being made to introduce a new system of per hour wages payment system to replace existing monthly salary payment system. This is being done to circumvent legal; obligatory fixed working hours in a day and weekly and yearly leaves.

After the Pakistan Revenue Automation Limited (PRAL), the much touted private sector arm of the Central Board of Revenue (CBR) set up to collect figures and data on various business activities has messed up the trade statistics, there is no accurate information on the export performance of garments, knitwear and hosiery. Since January this year, the government is releasing only the aggregate import and export figures with no item wise breakdown. This has led to utter confusion, and conflicting assessments are being given on the performance of value added sectors of the textiles.

Aziz Memon, a leading exporter of garments and Chairman of the Textile Quota Management Supervisory Council is of the view that the value added sector was doing well in export business. He did concede that garment and knitwear exporters have some problems in Europe in addition to pressures from high utility and transport cost, rising interest rates on export refinance and bank loans. “The 6 per cent relief announced on Tuesday will hopefully give us a good break,” Memon said.

Wajid Jawwad, a leader of garment sector confirmed of closing down of “number of garment units’’ because of the financial stress. Majyd Aziz named three top garment companies of the country that have been forced to open their retail outlets in Karachi and Lahore because their business partners in retail business were not paying back in due course of time.