KARACHI, Nov 10: Commerce Minister Humayun Akhtar Khan on Thursday said that the October 8 earthquake may not have any negative impact on the economic growth of the country, but the government would have to cut allocations for Public Sector Development Programme (PSDP) to divert the resources for rehabilitation.
Addressing the members of All Pakistan Textile Mills Association (Aptma), the minister said that both President Musharraf and Prime Minister Shaukat Aziz were of the view that the textile sector, which made windfall profits in the last couple of years, should contribute towards donations and rehabilitation funds needed for the quake victims.
“I will be candid with you that the government expects 50 per cent of relief and rehabilitation funds to come from textile and other private profit-making sectors,” the minister asserted to a large gathering of textile tycoons.
Humayun said that the government was banking upon such profit-making sectors which could raise funds for the rehabilitation of quake victims and Aptma belonged to the richest segment of the industry.
The Rs200 million donation announced by Aptma chairman APTMA Ahmad Kuli Khan Khattak in his address of welcome was termed by the minister as too little and said “still there is a room for improvement in this amount.”
However, the minister’s comments were not liked by most of the textile tycoons and during question and answer session they did not only try to defend themselves but also put counter demands before the minister.
In a sort of retaliation the Aptma chief said, “There are a lot of apprehensions and fears about the proper utilization of funds and we would like that transparency should be ensured in the entire system from collection to distribution of these funds.”
However, he assured to improve the amount being committed towards donation for quake victims.
Mr Khattak also suggested that the government should now vigorously take up the issue of GSP plus with the European Commission and should demand review of economic programme for the developing countries like Pakistan and provide same facility of GSP Plus as given to Sri Lanka and some other countries affected by tsunami.
Responding to this, the minister said that he had already taken up this matter with the EC and they should look forward towards January 1, 2006 when the GSP would come into force.
The minister briefed the Aptma members about development and negotiations being carried out at different international forums, including WTO and Free Trade Agreements, Regional Trade Agreements as well as Most Favoured Nation (MFN) status.
Referring to apprehensions of the participants with regard to Rules of Origin and GSP Plus, the minister said that the rules of origin was the prerogative of the EU and if they were also adopted by the Saarc members then it may damage by making up exporter of yarn and fabric.
However, Farooq Sumar said that instead of wasting time on talks with the EC on GSP Plus, first of all we should know whether the EC was empowered to bring about a change in the rules of origin to accommodate Pakistan on account of disastrous earthquake or not.
Mushtaq Vohra, chairman Aptma (Sindh-Balochistan zone), pointed out that after the removal of textile quotas the developed nations were frequently imposing countervailing and anti-dumping duties to restrict imports from developing countries and there was a greater need to bring in effective change in these rules.
Shabir Ahmed, chairman Pakistan Bedwear Exporters Association (PBEA), said that it was wrong to say that textile sector had made windfall profits during last couple of years and suggested that auditors should be appointed to verify the fact.
On the contrary, he said many apparel units were planning to relocate their industry to Bangladesh where they could get benefits allowed to them under LDC and labour was also very cheap. Shabir said that we could not compete when we had to pay 13.1 per cent anti-dumping duty as well as 12 per cent customs duty whereas Bangladesh was getting duty-free market access to EU and US.
Aptma members also raised the issue of sale of raw cotton by the TCP to foreign buyers not only at lower than the domestic rates but also at a time when the current crop had been estimated to be short. They argued that there was no justification for disposing of TCP stocks of cotton at cheaper rates, when the domestic industry was paying 13 cents higher on import of raw cotton.
Bashir Ali Mohammad, head of the largest textile group of the country, warned that if not appropriate measures were taken by March next, the entire textile industry would become sick. He said profit margins had depleted owing to high mark-up rates, cotton prices and other inputs.
He further said that around 20 to 30 per cent of industrial workforce have left for Azad Kashmir to help their near and dears and now they are demanding some shelter to come back to Karachi for their families as well.
Aziz Memon, a leading exporter of apparels, said that there were no more margins left for made-ups particularly when there was a 19 per cent gap between their cost and the cost incurred by Chinese and Indian apparel industry.
Aptma former chairman Anwar Tata said the general impression created by world agencies that Pakistan along with China and India were going to be big players in global trade of textile in post quota era was totally wrong. “Pakistan stands nowhere as it does not have the capacity to go into large scale production nor it has required trained manpower and industrial base to stand against these two countries”, he added.