November 09, 2006	Thursday	Shawwal 16, 1427

KARACHI, Nov 8: Exports of blended value-added textile goods is declining owing to high cost of polyester staple fibre (PSF) which had been removed in the last budget from the Duty and Tax Remission Rules for Export (DTRE) scheme.

Despite the fact that the government has been taking different measures to arrest the falling exports of textile goods by giving R&D support and freight subsidy, but these steps have failed to produce desired results.

Exporters of blended polyester-cotton (PC) yarn and fabrics drew the attention of the government towards the issue and demanded that import of PSF should be allowed under the DTRE scheme.

The 6.5 per cent import duty on PSF has rendered their products uncompetitive on the world markets, they added.

The prime minister in different meetings with trade bodies and exporters had agreed that exclusion of PSF from DTRE was indirect tax on exporters and it should be included in the scheme to arrest the dwindling exports of blended textiles.

Former chairman Pakistan Cloth Merchants’ Association (PCMA) Muhammad Iqbal Mangrani told Dawn that monthly import of 1,500-2,000 tons of PSF (meant for re-export through blending) was negligible compared with local production of around 50,000 tons a month.

He further said that imported PSF also included speciality fibres such as PSF black dope dyed, optical bright and anti-bacterial type or flame retarded fibres, which are not produced locally.

Exporters also claimed that since two out of five PSF producers had achieved economy-of-scales as their production capacities were around 225,000 tons per annum and could be compared with plants in East Asian countries but still they sought protection.

Mangrani said the local PSF manufacturers should enter export market because the government had allowed them zero rated import of major raw materials such PTA/MEG. “The sovereign guarantee given by the government to PSF producers should put them at a comfortable place as cost of production, if not the same, should be lower than other producers in the world,” he added.

Even after getting excessive protection none of the existing PSF manufacturers was making serious efforts to export his product but preferred to survive under protection.

Instead of competing on the world markets these PSF makers have approached the National Tariff Commission (NTC) to impose anti-dumping duty on import of PSF from Korea, Thailand and Indonesia. The case is pending before the commission.

This has created an uncertain condition for the manufacturers of blended products. They import PSF only to re-export it after making value-addition and earn foreign exchange for the country, Mangrani asserted.