September 19, 2006	Tuesday	Sha'aban 25, 1427

LAHORE, Sept 18: Textile spinners are waiting with their fingers crossed for a call from prime minister’s adviser on finance Dr Salman Shah on his return home from a World Bank-IMF meeting in Singapore, setting up a meeting with the Aptma leaders for discussing and addressing the issues eroding competitiveness of the basic textiles sector.

“We are very optimistic about the forthcoming meeting with Dr Shah and expect that it would take care of most of the issues and problems faced by the spinning sector,” a senior Aptma leader told Dawn on Monday.

He said the spinning industry was confronted with serious issues that had increased its cost of doing business making it uncompetitive in the world markets and hampered further investment.

The meeting, the venue and date of which would be determined after Dr Shah’s return home, is being set up on the instructions Prime Minister Shaukat Aziz. Mr Aziz had asked his adviser to sit with Aptma leaders to discuss their issues and problems and propose measures for their resolution in response to a representation made by Aptma through a letter sent to him a few days back.

Aptma made the representation after the prime minister asked its leaders in a meeting with him in the last week of August to give the details of the issues and proposals for their resolution in writing.

“We are glad that the prime minister took no time in responding to our representation and asking Dr Shah to sit with us to address our problems. This shows seriousness on his part to address the issues facing the spinning industry,” the Aptma leader said. “We hope to receive a call from the adviser as soon as he returns from abroad.”

In its representation, Aptma has listed various issues that have eroded the competitiveness of Pakistan’s spinning industry following the abolition of the quota regime from January 1, 2005.

Aptma is trying to convince the government to reduce interest rates on the long-term liabilities of banks, leasing companies and other financial institutions outstanding against the spinning industry as of June 30, 2006.

The government has already allowed the value-added sectors to swap their outstanding loans since January 1, 2003 with cheaper long-term financing (LTF) at the rate of 7.5 per cent.

The spinners want LTF to be made available to them at five per cent interest rate to make the industry viable because, according to the Aptma representation, the “strident rise in various cost push factors has an estimated financial impact to the tune of Rs75 million on an average sized spinning mill with 20,000-25,000 spindles.” Such mills form around 62 per cent of total spinning sector.

Aptma also wants the government to reinstate the import of polyester staple fibre (PSF) for re-export into the Duty and Tax Remission for Export (DTRE) scheme or give refund to the exporters of the 6.5 per cent customs duty charged on the synthetic fibre’s import.

The government removed PSF from the DTRE scheme in the budget for the current fiscal year and imposed 6.5 per cent non-refundable customs duty on its import to what officials say protect the local PSF industry.

The move, the spinners say, had made the export of polyester yarn and its products from Pakistan 6.5 per cent more expensive than the other regional competitors like China and India.

Further, Aptma has urged in its representation to the prime minister to initiate some kind of cotton purchase facilitation programme, thereby providing the spinning industry with cheaper finance for the procurement of raw material for its operations. The spinners say they procure cotton for nine months and thus incur heavily in terms of financial charges.

“The spinning industry operates by buying cotton for the whole year in the span of three months during the cotton season. Therefore, the industry bears additional carrying cost as compared to its international competitors. The (cotton) carrying cost ultimately increases the total cost of production. In this regard it is submitted that short-term loans for procurement of cotton be provided (to the industry) at reduced rate of interest from October 1, 2006,” the representation says.

In addition, Aptma has called for the withdrawal of all innovative taxes on the textile industry to make it truly zero rated and abolition of import duty on textile machinery and spares for a period of two years.

The Aptma leaders project a total investment of $7.7 billion in the spinning sector and creation of six million jobs by 2010 if the measures suggested in the representation for addressing the issues and problems facing the basic textile industry are implemented by the government.

Moreover, they say, the textile exports will grow to $20 billion in the same period, and the share of textile sector in GDP will increase to 18.95 per cent by 2015 from the existing 10 per cent.