Textile industry now looks for a favourable outcome from 'Trade Policy'
The government is dropping broad hints of accommodating “Maximum Possible” demands of textile exporters provided they give a firm commitment of bringing in $15 billion in exports earnings during 2008-09.
“The Government desperately needs $5 billion over and above official export projections of $22 billion to keep trade imbalance and current account deficit with in manageable limits,” a senior textile industry leader quoted Federal Finance Minister Naveed Qamar who held a three hour long meeting with over two dozen businessmen here on Saturday evening at the Chief Minister House, Karachi.
“We have been invited by the Minister to Islamabad on Thursday to carry on our discussion on specific issues” said Zubair Motiwala, Chairman of Site Association of Industries and former President of KCCI.
The textile industry leaders are now looking for a favorable outcome from the Economic Coordination Committee (ECC) of the cabinet meeting being held in Lahore on Tuesday and also from the Trade Policy to be announced on July 22nd.
They are confident of getting financial assistance perhaps with a change in name from Research and Development subsidy to Duty Drawback.
“The Government may give 11%, 9% or 6% depending on availability of resources and the capacity”. One of the top garment exporter indicated.
Textile exporters say the depreciation of the rupee against the dollar has helped to give them a competitive edge of about 5.5% in the export market, but at the same time has added to their burden because of increase in cost of imported inputs and accessories and also in their local cost of duties and taxes.
The strategy is to discourage export of yarn and fabric and promote export of home textile and readymade garments. Therefore, the cash subsidy on fabric export may either be withdrawn altogether or brought down to two or one percent.
The garment sector is also asking for fabric import as many manufacturers contend that local fabric does not meet the requirements of their buyers.
Many fabric manufacturers in Pakistan are exporting their products to India, Bangladesh and a few other countries for being used in stitching of dresses and apparels for export to the USA, the EU and other markets.
The Government wants to shift focus on readymade garments and for the federal minister is said to have given indications of offering incentives.
“Garments exports bring highest amount of foreign exchange and offer jobs at lowest investment,” said one of the business leaders who attended the Saturday meeting.
Business leaders asked the federal minister to change the composition of Oil and Gas Regulatory Authority and National Electric Power Regulatory Authority.
We want a three member Ogra and Nepra, Zubair Motiwala said. These two regulatory bodies should be headed by an independent and private sector professional with one member drawn from superior judiciary and a competent person from the government.
Karachi Chamber of Commerce and Industry