KARACHI, May 29: Apparel manufacturers and exporters under the umbrella of Pakistan Apparel Forum (PAF) have drew the attention of the government towards the serious crisis in value-added textile industry and said only last week five units of knitwear engaged in manufacturing of branded products for foreign chain stores have closed down.
In a press conference on Tuesday they expressed dismay over the government’s policy for clubbing the value-added textile sector with other sectors of the industry.
The press conference was attended by leaders belonging to Pakistan Hosiery Manufacturers Association (PHMA), Pakistan Cotton Fashion Apparel Manufacturers and Exporters Association (PCFA), Pakistan Knitwear and Sweaters Exporters Association (Paksea), and Pakistan Readymade Garments Manufacturers and Exporters Association (Prgmea).
The leaders were unanimous in their view that apparel sector should be given recognition with a separate policy. They suggested that the government should divide textile sector into three sectors – ginning, spinning and weaving, apparel and finally home textile.
They expressed resentment over the negative impression formed in studies carried out by the ministry of commerce and said such studies normally cover the entire textile sector and for this reason the PAF members seek separate and special recognition because their problems and activities are entirely different from other segments of textile.
Business leaders, who addressed the press conference, included Chairman PHMA Naqi Bari, Khawaja M Usman (PCFA), Naseem Farooqui (Paksea), and Ejaz Khokar (Prgmea). They demanded of the government to declare all apparel units, whose 80 per cent production is exported as Export Processing Units (EPUs) because this will give them a lot of relief and exemption from local laws and taxes.
They pointed out that one of the reasons for their cost multiplying was the rising inflation, which on an average is 10 per cent per annum and in the last five years has accumulated to 50 per cent increasing cost of production.
“Gas prices are also on the higher side as compared to Bangladesh and, therefore, we ask the government to give the apparel industry a special gas tariff as is being given to the fertilizer units. This tariff discount should be available only to the apparel manufacturers-cum-exporters instead of across the board deduction of gas prices.
The apparel leaders further said that the revaluation of currency had also seriously affected export proceeds in last five years when dollar – rupee parity was at 64.22 but today it is at around Rs60.71, which is about 5.5 per cent.
Last year knitwear exports stood at $1.73 billion and the industry contributed through direct deduction withholding tax of Rs1.038 billion. This year exports of knitwear are expected to be around $2 billion and withholding tax deduction will be at around Rs1.200 billion.
They further said the knitwear industry was heavily burdened with indirect withholding tax at different stages such as ginning one per cent, spinning 0.5 per cent, knitting one per cent, processing one per cent, outsourcing stitching one per cent, which have a total impact of around Rs3,000 million.
Another irritant is the regular travel advisories owing to adverse report from foreign consulates and embassies as a result of which foreign buyers avoid visiting Pakistan and call exporters for approval of samples to Singapore, Hong Kong, Dubai and elsewhere. This also adds to exporters’ cost.
It was clarified that the research and development (R&D) support given to the value-added apparel exporters was not a cash subsidy as was being reported in a section of media but was an expense for exporters made towards development of products through research.
