July 11, 2007	Wednesday	Jamadi-us-Sani 25, 1428

LAHORE, July 10: Pakistan’s polyester is 22 per cent more expensive than China’s synthetic fibre because the local manufacturers price their product at import parity to ensure protection against the manmade fibre imports. The practice has restricted the use of local product by the spinning industry.

A comparison of polyester prices in Pakistan and China carried out by a spinner Feroze Gulzar shows that the usage of synthetic fibre by the local textile industry can be increased to the global cotton synthetic ratio of 50:50 from the present 30:70 provided the gap in the product’s prices is bridged.

The FoB price of polyester in China is Rs73.81 per kg against local product’s price of Rs89 a kg. Thus the local producers of polyester are enjoying a total protection of Rs18.30 per kg, including 3.5pc subsidy (R&D) announced in the budget for the current year.

In order to bring the prices at par Feroze Gulzar proposed that the government should abolish 6.5 per cent custom duty on imported polyester, provide 6.5 per cent freight subsidy to offset the freight charges on its import from China. It should also give incentives through attractive long-term interest rates and tax holidays for establishing new polyester plants to break the cartel of four local polyester manufacturers.

He further said that the government should also set up a committee consisting of spinners to check the use freight subsidy based on prevalent charges from China and the Far East.

He said that the DTRE scheme covers only 5pc spinners and its impact on prices is negligible.

He felt that the availability of polyester at prices, at which it can be imported from China, should remove the pressure on cotton, allowing the mills to avoid local price hike.

He said the reduction in polyester prices would also make Pakistani blended yarn products globally competitive and would help the industry cope with shortages of local cotton.