KARACHI, April 28: Pakistan Leather Garments Manufacturers and Exporters Association (PLGMEA) has urged the State Bank to de-link the export refinance rate from Treasury Bills (TBs) as their yield has been increased to 7.18 per cent.

In a statement issued on Thursday, the chairman, PLGMEA, Fawad Ijaz Khan expressed concern that increase in TBs yield to 7.18 per cent would result in raising the export refinance rate to 8.5 per cent, which is very high for exporters.

He said that refinance mark-up cost is the second major expense of exporters after salary and any increase in its rate would raise the cost of the items rendering them uncompetitive in the world market.

Mr Fawad Ijaz further said that the cost of other utilities like fuel, electricity, gas is also rising sharply. Similarly, the rise in export refinance rate neutralizes other benefits being offered by the government.

He apprehended that exporters would incur significant losses and their already depressed exports would be further jeopardized. The PLGMEA chief further said that leather garment exports have declined by more than 9.37 per cent to $205 million during July-Feb 2004-05 as compared to $226 million during the same period of preceding year.

He appealed to the Governor State Bank Dr Ishrat Husain to consider this issue in the interest of exports and should immediately de-link export refinance rate for value-added sectors like leather garments, textile garments, carpets etc in which further value addition is not possible.

The PLGMEA chief demanded that the export refinance rate should be fixed between 3 to 4 per cent for the year 2005-06.