KARACHI, June 22: Disappointed over the budgetary proposals contained in the 2007-08 budget, the textile industry has now entered into most critical stage of its history, particularly when the policies announced by the government make little difference between exporters of value-added goods and manufacturers of semi-finished raw material.
A buzzword is circulating in textile circles nowadays stating that ultimately Pakistan has been officially declared supplier of `semi-finished textile goods.’ In the past global textile rating agencies often used to state that Pakistan would ultimately become supplier of semi-finished goods but now the same has been vindicated by economic wizards of Islamabad.
But looking at the developing scenario it seems that Pakistan would also miss the chance of becoming a supplier of semi-finished textile goods as spinners for the first time in the history of this country held a protest rally on Friday in front of National Assembly.
In the past growers and ginners, in order to get their point of view registered with the policy makers of Islamabad, adopted similar tactics and somewhat succeeded in making them realise the gravity of situation.
Pakistan Hosiery Manufacturers Association (PHMA) Naqi Bari told Dawn that it seemed that economic planners instead of saving the sinking apparel sector wanted to totally destroy it by introducing such measures which would make the entire textile industry into semi-finished goods supplier to the neighbouring countries.
Surprisingly no relief has been given to garment sector, which was already paying six per cent withholding tax while the spinning sector, which was paying 1.5 per cent tax, was allowed a reduction to 1 per cent in the tax. Similarly, he said that fabric exporters, who were paying 1.25 per cent income tax on total export proceeds, got a relief by one per cent cut in withholding tax.
Chairman Pakistan Bedwear Exporters Association (PBEA) Shabir Ahmed said that change in rate of withholding tax in the budget 2007-08 had put value added textile sector in most disadvantageous position as it had tripled its tax rate against yarn and fabrics exporters.
Giving some details, he said that by converting one kg of cotton to yarn the country earns $2 on its exports where the made-ups or value-added sector earns $6 by converting same quantity of cotton. However, when it comes to taxation the former pays only one per cent and latter have to pay thrice of the amount. It should have been zero rate tax on export of value added goods.
Former chairman Korangi Association of Trade and Industry (Kati) Manzar Alam said that if the government could give subsidy to agriculture sector on energy consumption by tube wells up to 25 per cent then why the industry was being neglected despite the fact that it had been facing high input cost and was unable to compete in the world market.
He said after the May 11 incident in Karachi foreign buyers have completely stopped to visit the city. He demanded that the government should give the industry Research and Development (R&D) on marketing of value-added goods.
Talking to Dawn from Islamabad chairman All Pakistan Textile Association (Apta), said that 150 mill owners had assembled outside the National Assembly to lodge their protest against indifferent attitude of the government towards their ever-deepening crisis.
He claimed that 125 spinning units had closed down throughout the country resulting in shutting down of about 1.5 million spindles and warned that if no immediate corrective and remedial measures were taken by the government by next month more 250 units will shut their operations, which will knock off around 3 million more spindles out of production.
But the biggest problem that might be confronted by the government would be of 2 million jobless people, who would lose their livelihood owing to wrong polices.
A leading textile tycoon Naseem A Sattar said that it was unfortunate when you heard from government functionaries about inefficiency of the private sector and textile industry in particular.
He said if any of high official from Islamabad bothered to visit any textile unit then only he could come to know how “we are working and what parameters have been laid down to meet all economies of scale as well as efficiency”.
All Pakistan Textile Association Chairman Adil Mahmood later told Dawn on telephone from Islamabad that Minister for Textile Industry Mushtaq Cheema and other MNAs came out of the National Assembly and took a team from the protesting spinners inside to listen to their grievances.
He further said that later they also met Prime Minister Shaukat Aziz, who assured them to look into their problems and said that the textile minister would be approaching them to find out solution to their problems.
Adil Mahmood said that the negotiating team of the spinners drew the attention of the prime minister towards high rate of mark up and utility charges.