KARACHI, April 27: Minister for Textile Industry Mushtaq Ali Cheema has constituted a seven-member committee to suggest ways and means to reduce the cost of production.

The committee headed by Zubair Motiwala had been asked to submit its report by May 10, 2006, so that its recommendations and proposals could be accommodated in the new budget.

Chairing the 14th meeting of the Federal Textile Board (FTB) here on Thursday, the minister stressed that the suggestions of the committee should not be based on subsidy because the government was sensitive about this matter and did not want to make the industry inefficient through artificial measures.

The meeting discussed in detail the issues and problems confronting the textile industry as a whole and the minister patiently listened to the hue and cry of the textile tycoons who said that the industry was fast becoming sick and some leading units in made-up sector had already been closed down.

However, the crux of the issue was high cost of doing business compared to other countries of the region. The representatives from different textile sectors, including power-looms, garments, hosiery, bedwear, spinning and weaving industry were unanimous in their views that host of factors, including high tax rates, costly power, gas and water charges and high mark-up rates were amongst primary causes of high cost of production.

The minister pointed out that the next meeting of the FTB would be chaired by Prime Minister Shaukat Aziz and the committee’s recommendations should be sound and based on research work.

Aptma representative Junaid Nawab, who spoke on behalf of spinners, complained that high cost of production was making the industry sick and if timely decision was not taken the situation would go out of hand.

Bashir Ali Mohammad, a leading textile tycoon, warned that if the government failed to come up with any solution to bring the cost of production down the entire textile sector would collapse.

He said that the banks had started feeling the pinch as pay-back of huge loans was becoming difficult for textile units and some banks were only getting interest and the actual capital was at risk. Furthermore, he said that world buyers had started to feel that Pakistan had no role in textiles.

Mr Bashir said that cotton prices had gone up to Rs2,500 from Rs1,700 per maund a year ago, similarly, gas prices also rose by 42 per cent in two years, there was 90 per cent increase in furnace oil.

He further said that world inflation was at 2 per cent but in Pakistan, as per official figures, it was 11 per cent. “There is urgent need of devaluation and if the government does not want to do so, it should adjust exchange rates.”

Bashir said that the problem was that policymakers in Islamabad had a mindset that textile tycoons were “choor” whereas the fact was that our exporters were now getting leftover orders in the world market and the profit margins had gone down.

Dr Ikhtiar Baig said that the textile industry was confronting with a number of issues, including high tax rates, high input costs etc. He said in Bangladesh there was no income and sales tax and import of machinery and spare parts as well as raw materials were zero-rated.

Mr Baig said our cost of production was three times higher than Bangladesh. “Our exporters and manufacturers have to pay 1.5 per cent income tax, 0.25 per cent export development surcharge and 0.3 per cent stamp duty.” He suggested that one slab should be there which should not be more than 0.25 per cent.

Pakistan Bedwear Exporters Association chairman Shabir Ahmed said that special treatment should be given to textile industry, which is largest employment provider. “In India they have set a target of providing jobs to one million people and are little concerned about revenue collection in our country the entire policy is revenue-oriented,” he added.