Textile millers building up pressure: Relief package
By Sabihuddin Ghausi
KARACHI, Jan 22: All Pakistan Textile Mills Association (Aptma) is holding an extra-ordinary general meeting in Lahore on Tuesday to keep on mounting pressure on the government for getting more financial relief and utility tariff concessions.
“A textile unit of 20,000 spindles has now come under additional financial burden of Rs80 million and a 120-looms unit is facing additional crunch of Rs65 million,” complained Ikhtiar Baig, a local textile mill owner. This additional burden comes from a combination of factors that are financial, transport and energy.
Aptma leaders now want a marked reduction on petrol, diesel and gas prices as international crude oil price has come down to $51 a barrel from $78. The government has recovered much more than what was offered as subsidy to the public and there is absolutely no justification to continue with high energy prices.
Baig quoted a study of a chartered accountant firm that analysed results of 100 textile mills and found that these mills worked on only 3 to 4 per cent margin which has since been eroded.
Textile mill owners now want exemption from 1.5 per cent presumptive tax on their export proceeds, utility tariff, non-tax revenue like EOBI, Social Security and their Tuesday meeting decision comes after the government has shown reluctance to give any consideration to the Tariq Saeed Saigol package.
In their private conversation, the textile mills leader now demand an outright 12 to 15 per cent cut in rupee exchange value straightaway or at least 11 per cent cash rebate on export of value-added textile products. All these demands come in the wake of reports that textile export has started picking up.
Quite a substantial part of Bangladesh share of textile exports to EU have been shifted to Pakistan because of troubles in Dhakka and other parts.
Textile group has shown about 13 per cent increase in export during December 2006 over November 2006. Textile group fetched a little less than $1 billion ($976m) in December, which is so far the highest and has given hopes of further improvement in coming months.
This single month has offset the losses suffered in the previous six months and total textiles’ export during the first six months of FY07 amounts to $5.32 billion as against $5.09 billion earned in the same period last year.
Officials say that textile has benefited from low rate export refinance, swapping of long-term loans with export-oriented unit loans and cash rebate now being offered from six per cent to three per cent on various textile goods.
State Bank of Pakistan Governor Dr Shamshad Akhtar in her press briefing at the launching of quarterly report had said that she was ready to help the government in bringing down the cost of doing business. She had said more than 18,000 cases of rebate on textile products were processed.
A realistic fixation of utility tariff, market analysts say will do a lot of good to textile production and exports and to the business in general.
