KARACHI, Feb 15: A relief package is being offered to the readymade garment exporters to enable them remain competitive in the European market where they are found to be placed at a highly disadvantageous position against Bangladesh, Sri Lanka, India and China.
Pakistan's billion dollar export trade of garment has come under severe strain from the beginning of 2005 on expiry of textile quota regime. From January 1, 2005 Pakistan was removed from the generalized scheme of preferences (GSP) in the EU where now marketing invites 12 per cent duty.
Bangladesh enjoys total exemption from duty. Sri Lanka enjoys 50 per cent exemption from duty but it is asking for full exemption after tsunami disaster. Pakistan has been clubbed with India and China. But China and India are said to be offering subsidies and concessions to the garment industry. At stake is jobs of about 200,000 workers in the cottage level garment units spread in all the parts of the country.
"We are giving final touches to a relief package for the garment exporters", confirmed the Federal Textile Minister Mushtaq Cheema while conceding that garment exporters in Pakistan are under severe strain and in uneven position in the export market when compared to the neighbouring South and East Asian countries.
The minister is expected to be in the city late this month. He informed Dawn by telephone from Islamabad on Tuesday that the proposed relief package would take care of all the losses being suffered by the garment exporters.
Garment exporters, however, believe that the government has already taken too much time in acknowledging the problems of their industry. "A salvage package is yet to be offered even after two months of the levy of 12 per cent duty in the EU market.
"I have lost a $4 million shirt market in Germany", a leading garment exporter confided who fears if there would be further delay in relief package the $1 billion export trade would be doomed.
During first six months of the current fiscal year when textile trade was governed by quota rules Pakistan's readymade garment exports were down by more than 20 per cent in value and over 18 per cent in quantity.
Booking of export orders and actual exports are said to have been slowed down since January 1 this year. Official trade figures for January are not available because of problems in Pakistan Revenue Automation Limited (PRAL) where officials are struggling to compile accurate data from goods declaration forms.
Aziz Memon who was Chairman of the Supervisory Council of Textile Quotas in the Export Promotion Bureau estimates that India and China enjoy 19 to 20 per cent production cost advantage over Pakistan because of the subsidies and concessions given to domestic industry.
A comparative study shows that FOB cost of a dozen men's pique polo shirt in Pakistan comes to $35.26 as against $32.25 in India and $30.25 in China. "Dyeing and finishing in India and China is less costly than Pakistan because of the developed local chemical industries", Aziz Memon said. He said virtually all varieties of clothing and apparels in Pakistan are costlier than those being made in India and China.
Sources close to the government say that official did make a case for duty free access for the garments in EU when Prime Minister Shaukat Aziz visited Brussels late last month. But as Pakistan government's pleas for removal of anti-dumping duty on bed linen import went unheeded so was the case with Pakistan's request for granting GSP plus status.
Pakistan's garments export constitutes about 1.7 per cent of total European Union clothing imports. Under the rules any country with over one per cent share in EU market is taken out of GSP plus concession.
Garment exporters did make a case for relief in the last meeting of Textile Board which was chaired by Prime Minister Shaukat Aziz on February 1. But since then more than two weeks have passed no relief package has been finalized for the garment exporters.
Pakistan exported more than 11 million dozen of garments during July to December 2004 which fetched $389.49 million. Last year during July to December 2003 Pakistan exported about 13.5 million dozen pieces of garments that earned $488.67 million.