LAHORE: Terming the severe energy crisis the biggest issue besetting industries, textile traders say it has not only slowed down economic activities but also badly hindered export growth.
Lack of necessary funds, deteriorating economic conditions and negative edge of competitiveness in regional and global markets are the other factors severely affecting industrial activities, said Pakistan Textile Exporters Association Chairman Sheikh Ilyas Mahmood and Vice-Chairman Adil Tahir in a statement here on Saturday.
“Acute energy shortage has badly hindered export growth and restricted textiles exports below $14 billion, as it remained $13.84 billion. Textile exports to the EU, however, increased by 18pc,” said the statement.
Resenting the situation, Mahmood and Tahir said in 2012-13, textile exports were $13.06 billion and the sector was confident of crossing the $15 billion mark this year. However, they appreciated 18pc increase in textile exports to the EU as it touched $5 billion in outgoing fiscal year. The reason was just duty waiver facility by the EU. The GSP Plus status, no doubt, was a big achievement in the outgoing year, which provided some cushion to the country’s sagging economy, however, much would depend on regular supply of gas and electricity to run the manufacturing units.
Textile exporters would not be able to get complete benefit from the duty-free access unless the government took serious measures to resolve energy shortage that held back the textile industry, they added.
The PTEA chairman expressed concern over 3.5pc negative growth in textile exports for regions other than the EU. Calling the declining trend of investment in textile sector compared to other regional countries a matter of serious concern, he urged to redesign and bring consistency in policies on taxes, ensure availability of energy, bring interest rate down and release liquidity on drawbacks and refunds as textile sector was the only hope for revival of the economy.
“With better access to the EU market, Pakistan is expected to add at least $1 billion to textile exports every year and would achieve $25 billion mark in five years, he added.
Commenting on the upcoming textile policy, Mahmood said it should encapsulate the entire textile spectrum providing directions for financial and industrial facilities as well as removing hurdles and provision of necessary incentives to value-added sector to enhance textile exports.
Key initiatives of the previous textile policy were not fully implemented as the government released only Rs28 billion against the commitment of Rs188 billion, he added. The policy also guaranteed dispensation of regular supply of gas and power to the textile industry. However, it had failed as a large number of textile units had shut operations due to energy constraints, resulting in a huge loss to the industry, the chairman added.
The exporters urged the government to resolve the crisis, as challenges like energy crisis, high interest rate, liquidity crunch and financial stress were holding this mainstay of national economy from growing to full potential. The government should concentrate on visionary steps and address genuine concerns of the industry with innovation and extraordinary solutions in the upcoming textile policy.
PRGMEA: With prolonged electricity loadshedding and two-day availability of gas in a week, the Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) sought level-playing field for value-added textile industry of Punjab, as industries in other provinces were enjoying smooth energy supplies, rendering the Punjab industry uncompetitive.
“Punjab’s industry is trying to cope with growing cost of production because of gas shortages, high electricity tariff and stuck-up sales tax refunds,” said PRGMEA North Zone Senior Vice Chairman Jawwad Chaudhry on Saturday.
The government should provide a level-playing field by raising gas and power supply to the industry to help exporters cut their energy costs and release billions of rupees stuck in sales tax refunds, he said.
According to him, continuously deteriorating law and order situation in the country, followed by lingering energy shortages that had virtually crippled the industry were the prime reasons for decline of textile exports. Besides, negative perceptions about Pakistan and high financial costs were adding fuel to the fire.
“Because of the deteriorating law and order situation and shortage of electricity and gas, factories are unable to timely deliver whatever limited orders they managed to procure from foreign buyers. We have been crippled by electricity loadshedding or gas shortage, which reduces our work week to only three to four days. Due to gas shortage, mills cannot process our fabric in time and the sewing units simply cannot guarantee on time deliveries of export shipments. With this productivity level we cannot compete with Bangladesh let alone India or China,” said Chaudhry.
He added the business community was unable to understand that instead of taking measures to control line losses and enhance cheap power generation up to capacity, policies were being evolved to add to the miseries of businessmen.
He said the industry needed cheaper electricity to keep the units operational and to complete export orders well within the given timeframe.
He urged the government to refrain from any further increase in power tariff as it would prove to be a deathblow to its reputation. He also urged the government to control line losses, electricity theft and inefficiency in recovery of dues and help stop political interference in the energy sector that had reduced the country’s economic growth.
Published in Dawn, July 20th , 2014