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News & Views PAKISTAN MAY FETCH $2 BILLION THROUGH KNITWEAR EXPORTS Pakistan may generate $2.0 billion through knitwear and garment exports in the current financial year (2002-2003). Pakistan has bagged $875 million by exporting garments, while the knitwear exports fetched around $846 million in unstable circumstances. The prices of Pakistan-made garments and knitwear articles have come down around 15% to 20% after the September 11, 2001 incidents in the USA. However, Pakistan had started receiving the knitwear and garments export orders for spring 2003. The reduction in import duties on textile related items were a welcome step, taken by the government, as it would provide relief to knitwear and garments industry. PAKISTAN TEXTILE MANUFACTURERS AT 'MAGIC 2003 USA' In an effort to meet the challenges of quota free trade regime, in effect from 2005, top Pakistani manufacturers of finished garments and textile products have booked exhibit space at one of the world's leading garments' show MAGIC in USA. MAGIC takes place twice every year in Las Vegas, USA, with an emphasis on the latest fashion trends in men, women and children garments and accessories, where top-most buyers from more than 80 countries converge to make deals and contracts with the manufacturers. This year, the show is scheduled from 18-21 February. Major Pakistani participants at this exhibition include Chenab Limited and Three Star Hosiery, while Bilori Group is also amongst the participant exhibitors from Pakistan. It is expected that with the proactive approach by attending the international exhibitions, Pakistan’s manufacturers of quality finished products can once again lead the country to the top order of world exports.
REFINANCE FACILITY: PCMA PLEA TO STATE BANK The Pakistan Cloth Merchants Association (PCMA) has demanded that the limit of three-dollar per metre for refinance facility on export of grey and bleached cloth be removed and is brought at par with the rest of the textile sector. The Central Chairman of PCMA, Ahmed Chinoy, in a fax to the Governor, State Bank of Pakistan, said that the share of fabric and artsilk was 27% of the total textile export, hence the sector needed special attention and incentives. Chinoy pointed out that the upward trend in the export of grey cloth was falling due to three dollars per metre limit for obtaining the export refinance facility. The powerloom industry was suffering badly and huge investments, made in the powerloom and spinning sectors may get lost, which would also lead to unemployment and loss of revenue to the government. Chinoy urged the State Bank Governor to restore the refinance facility
to the exporters of cotton grey fabrics as was allowed in the past. EMBARGO ON IMPORT OF 2ND HAND BOILERS Zubair Motiwala, Chairman, Pakistan Hosiery Manufacturers Association (PHMA), has urged Minister for Commerce, Humayun Akhtar Khan, to lift the embargo on the import of second-hand boilers. In a letter to the Minister he said that lifting embargo would not only curtail the cost of production of export-oriented industries in this time of stiff global competition but also go a long way in boosting the Pakistan's exports. He said that the value-added 100% export-oriented industries are contributing a huge amount in earnings of foreign exchange to the national exchequer among which the hosiery and knitwear industry alone contributes over $ 1 billion. He said that when industrialists buy a second-hand plant of either knitting, processing or finishing in Europe or Armenia, industrialists have to pay for the whole plant in which the boiler is included. These boilers have been found to be quite efficient and much more economical than the locally manufactured boilers, especially in view of the ever-increasing cost of inputs like electricity and gas. He pointed out that during a meeting of former Commerce Minister Razak Dawood with members of the PHMA, he had not only agreed to this view but also affirmed that steps would be taken for lifting of the embargo on the import of second-hand boilers. GOVERNMENT URGED TO PERSUADE EU Chairman Pakistan Readymade Garments Exporters & Manufacturers Association (PRGMEA) Pervez Hanif has urged the government to persuade the European Union (EU) to extend 2,000 tonnes out of already committed 4000 tonnes exceptional quota flexibility under the Textile Quota Management Policy 2001-04 to the readymade garments. The exporters informed the PRGMEA Chairman that Germany has also detained their shipments after the UK on the plea that Pakistan has exhausted 2002 quota. They pointed out that they had obtained special flexibility in line with the official circulars from the EPB and, therefore, the Quota Supervisory Council (QSC) should take up the issue immediately to save the garments exporters from a big mess. Pervez Hanif said that large shipments of Category-06 are detained at the different ports of EU states due to an over-shipment of 2.88 million pieces and the exporters fear huge losses, if these are not released at the earliest. He hoped that the government would take up the issue immediately and get it resolved at the earliest. APTPMA CONCERNED OVER COTTON FABRIC'S IMPORT The Regional Chairman, All Pakistan Textile Processing Mills Association (APTPMA) Abdullah Rafi has expressed concern over the import of cotton fabrics, especially denim, drill/twill and polyester. In a statement, Mr. Rafi said these fabrics are printed and stitched and re-exported to Europe and USA by using Pakistani quota and Pakistani market. There are reports that smuggling of cloth through China and Korea was being made on a large scale, having a crippling effect on the domestic industry. Mr. Rafi said that textile-processing industry is playing a vital role in the economic development of Pakistan through exports of value-added textiles of superior quality and high export standard. The APTPMA Chief expressed his concern over the reported under-invoicing on the import of fabrics, which must be immediately looked into and be stopped. He urged upon the government to review the situation and save the textile industry (weaving and printing), as no industry can survive under these circumstances. TEXTILE EXPORTS TO SUFFER UNDER NEW RULES Pakistani business leaders fear key textile exports to the United States will suffer as a result of contentious new US immigration rules requiring Pakistanis to submit to rigorous checks. It will negatively hit our exports, especially textiles, said Haroon Rashid, Vice President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI). Pakistan was added last month to a list of 20 suspect countries whose male nationals aged 16 and over, visiting the US must comply with stringent immigration checks. Anxiety over the new measures has spread to exporters, and their fear is focussed on the all-important trade in textiles, Pakistan's biggest export commodity. Rashid and other business leaders are worried that US importers will treat Pakistani exporters with scepticism and look to their competitors elsewhere. They said American buyers will be biased against Pakistan exporters and our potential business will be vulnerable to our competitors like China and India. The US is Pakistan's biggest trading partner. Pakistan exports to the US stood at $2.25 billion or 25% of its total exports in the fiscal year that ended June 2002. Pakistan was rewarded with several trade and economic benefits from the US and Europe for its co-operation, including the rescheduling of almost one third of its $38.5 billion foreign debt and massive loan and aid pledges. The benefits helped Pakistan's economy grow 3.6% last year. EPB SUSPENDS ISSUING LICENCES FOR BED LINEN Exports of bed linen items to European Union has come to a halt as Export Promotion Bureau (EPB) has suspended issuing export licences for the shipments made from December last. The suspension of export licensing probably is the result of over shipments and initiation of anti-dumping proceedings started by the European Commission recently against Pakistan cotton type bed linen exports. The proceedings are still in initial stages and suspension of licensing for this reason seems to be incomprehensible. Yet another possibility could be discrepancies in data reconciliation by the EPB with the import destination Brussels, the exporters reported. The EPB becomes aware of over shipment only when the export consignments are held up at destination ports and the buyers inform the exporters about the prevailing situation. Suspension of export licensing for EU is second instance of the failure of EPB monitoring system within the last three months. Exporters said that in October 2002 in similar circumstances export consignments of bedding items were held up at US ports and remained blocked till new quota year started in January 2003. These consignments have only recently been released after incurring huge demurrage charges to the exporters and loss of textile quota to the country as these consignments have been charged to 2003 textile quota of the country. PRGMEA WORRIED OVER SHIPMENTS AT EUROPEAN PORTS Pakistani garment exporters are in quandary over the cessation of their shipments at European countries' ports and refusal of export visas by the Export Promotion Bureau. According to Pakistan Readymade Garments Manufacturers & Exporters Association (PRGMEA) the Pakistan garments exporters to European countries, Category-6 which comprises shorts and pants have been shocked to find out that their shipments are being held up at European countries' ports because of the alleged over-shipment in this category. The association further complained that exporters are being refused their export visas by the EPB giving no reason whatsoever. PRGMEA has urged the QSC, EPB and the Ministry of Commerce to urgently take up this issue with the European Union authorities so that any delay or cancellation could immediately be avoided. TEXTILE QUOTA EXPORT UP BY 3.47% Textile export quota business fetched $2.28 billion during 2002 showing an increase of 3.47% over $2.21 billion earned in 2001. Official figures show that total quantum of textile product export under quota regime went up by 8.61% during 2002. Almost 80% of allocated quotas were utilised in respect of the US, 72.73% in case of the EU, about 65% of Canada and about 45% of Turkey. Pakistani exporters earned $1.11 billion from the EU market, $1.06 billion from the US, $62.52 million from Turkey and $46.78 million from Canada. In terms of average unit value, Pakistan exports to the US showed a decline of 3.98%. But average unit price of Pakistan textile products export to EU showed an impressive growth of 10.91% despite reports of cut throat competition triggered by a tariff free access given to Pakistan since January last year. PAKISTAN'S EXPORTS SEEN CROSSING $10 BILLION MARK The cotton trio - production, consumption and exports - is all performing well amid hopes to attain the country's exports target of $10.4 billion set for the current fiscal year, said textile millers and exporters. However, the ginners are divided over the cotton production estimates, finding themselves in a difficult position and not taking risk to accept a higher cotton production which may cause a decline in the cotton prices. Pakistan's exports reached $9.1 billion in 2001-02, hit by a slump in orders due to a slowing global economy following the September 11, 2001 attacks and the US-led war on terror in neighbouring Afghanistan. But Islamabad's relations with the West improved rapidly after President Pervez Musharraf backed the US-led war on terror. The country not only won increased market access in the European Union, but also received billions of dollars in grants and aid. But exporters said that despite increased exports their margins had shrunk due to the rising value of the rupee, which has appreciated almost 9% against the dollar since September 2001 to Rs 58.20/Rs 58.22 currently. This has been largely due to the global crackdown on money laundering
that has forced Pakistanis living overseas to send remittances using official banking
channels. SRO-410 TO STAY UNTIL DTRE FLAWS REMOVED Commerce Minister Humayun Akhtar said SRO-410, governing duty-free
import of machinery, spares and raw materials for the value-added textile industry would
not be withdrawn "unless all flaws in the Duty and Tax Remission for Export (DTRE)
rules are removed." The Minister conceded that the rising cost of production had made it difficult for exporters to compete in the quota-free environment. He said the cost of inputs and utilities including power in Pakistan was much higher than the rest of the world. He said he had spoken to the Chairman of Wapda on this matter and asked him to offer as many incentives to the industries in the new tariff package being prepared by the public utility as possible, charging them a lower tariff during off-peak hours. He admitted that although Pakistan had signed the WTO agreement, nobody was aware of its implications. He urged the businessmen as well as the exporters to guide him and the government on the WTO - related issues. PRGMEA HAILS EXTENSION IN SRO 410 Meanwhile, Chairman Pakistan Readymade Garments Manufacturers & Exporters Association (PRGMEA) Pervaiz Hanif has welcomed the Commerce Ministry's decision to extend SRO 410 for registered exporters. In a press statement, Pervaiz said the decision of Commerce Ministry would provide a sigh a relief to the exporters, especially those of the garments sector, who were bitterly panicked on CBR's move to replace the SRO 410 with DTRE scheme. The immediate shifting to the DTRE would have created enormous problems for the garment exporters as the DTRE scheme does not provide comprehensive solution to the issues like supply of raw material from the local sales tax registered or unregistered suppliers to the exporters. The PRGMEA has prepared proposals regarding the DTRE scheme after making a comprehensive review of the same, he said and added that these proposals would be helpful for the Commerce Ministry as well as CBR and make the DTRE scheme more user friendly for the exporters. CBR REVISES DUTY DRAWBACK RATES ON POLYESTER COTTON Central Board of Revenue (CBR) has revised the rates of duty drawback on export of various kinds of polyester cotton made-ups. The new rates will be effective from January 8, 2003. The rate of duty drawback will be 1.97% of the FOB value on export of 100% cotton grey made-ups filled with polyester staple fibre or hollow and polypropylene and its raw materials; 2.18% of the FOB value on 100% cotton bleach made-ups, filled with polyester staple fibre or hollow and polypropylene and its raw materials. The 100% cotton dyed or printed made-ups, filled with polyester staple fibre or hollow and polypropylene and its raw materials will be allowed at the rate of 3.32% of the FOB value; 3.88% of the FOB value on grey blended made-ups (all blends of polyester staple fibre) filled with polyester staple fibre or hollow and polypropylene and its raw materials; 4.17% of the FOB value on bleach blended made-ups (all blends of polyester staple fibre) filled with polyester staple fibre or hollow and polypropylene and its raw materials; and 5.16% of the FOB value on dyed or printed blended made-ups (all blends of polyester staple fibre) filled with polyester staple fibre or hollow and polypropylene and its raw materials. NEW QUOTA POLICY LIKELY TO SHOW IMPROVEMENTS The quota policy for 2003 is likely to show many improvements over the 2002 policy in the light of a large number of suggestions received by the Quota Supervisory Council (QSC)from the textile associations and stakeholders. At a meeting, presided over by the Chairman, Export Promotion Bureau, Tariq Ikram, the QSC Chairman, Abdul Aziz Memon, briefed the participants on the necessity of conveying the meeting pertaining to the present position of the ELVISA, exceptional flexibility shipment position of Cat-9 EU. To avoid arrest of consignment in the EU, one of the possibilities discussed was to stop issuance of visa of Cat-9 against offering equal benefit to the exporters to cover up their losses and to re-credit in the next year. SINDH COTTON OUTPUT EXCEEDS TARGET Cotton crop in Sindh is reported to have surpassed the production target of 2 million bales by 0.186 million domestic size bales, according to second estimate of size of Sindh cotton crop 2002, released by Sindh Agriculture Extension Statistics section. According to the report, the area under cotton cultivation, compared to last year, recorded a decline of 5.93%, and production by 10.45% due to shortage of water, while reddening of leaves of cotton plant in Sanghar, Hyderabad and Nawabshah districts, adversely affected the production. Ghotki district has topped the production list with 0.558 million bales, followed by Sanghar, Khairpur, Naushero Feroze, and Hyderabad districts. Despite Sindh government intentions to impose ban on import of Niab-78 seed from Punjab and to develop its own seed, Punjab buyers continue to make heavy purchases of Niab-78 from Sindh. According to official reports, seed-cotton equivalent to around 45,000 bales crossed over to Punjab and by the end of the season total export of seed-cotton to Punjab would be well over to 50,000 bales. ANNOUNCEMENT OF TEXTILE QUOTA POLICY FOR 2003 DEMANDED Pakistan Readymade Garments Manufacturers Association (PRGMEA) Zonal Managing Committee asked the government to immediately announce Textile Quota Management (TQM) Policy for 2003 to allow 100% utilisation of 2002 textile quota performance of the exporters for finalisation of contracts and meeting immediate export commitments. The Committee also recommended that out of growth or residual quota available for 2003 while 10% be set apart for allowing to the established exporters, the rest be put to auction in January, March, May and July, 2003. The Committee also suggested that where utilisation in 2002 had not exceeded 70% of the allowed ceiling, the categories be brought to first-come-first-served basis immediately. US POSITION ON EXCESS QUOTA The US government is not allowing "more access to Pakistani textile exporters except 9% to 13% enhanced imports over and above designated quota, and the same will be continued till the coming into effect of WTO regime two years down the line, US officials said. American officials claimed that Pakistan was allowed access beyond the allocated quota, and any further increase "is not in the policy framework of the government, right now". Pakistan is trying hard to get enhanced textile quota in the wake of September 11 events but, according to US officials, Pakistan's authorities are well in picture about this policy and have been informed about it during ministerial level meetings. They said that by November, Pakistan's exporters had utilised their allotted quota. Above this, US allowed Pakistanis 9% to 13% enhanced shipments in certain categories. These, too, had exhausted. Sources said that Pakistan would continue to enjoy the excess facility on its designated quota by 9% to 13% for the current fiscal year and till the WTO comes into effect. Later, it will be a free market for all. REFINANCE RATE REDUCED BY 1% The State Bank has reduced the export refinance rate by 1.0% point to 4.5% for January 2003. The banks would charge a maximum spread of 1.5% over this rate. This means that the exporters will get export loans from the banks at 6.0% from January 1. In December banks were offering export loans at 7% as export refinance rate was at 5.5%. Exactly a month ago the SBP had lowered the export refinance rate from 6.5% to 5.5% making it possible for the banks to offer export loans at 7.0% instead of 8.0%. RELIEF UNDER NEW SALES TAX REFUND RULES Textile exporters have appreciated the latest amendments in the sales
tax refund rules under SRO-02 (1)2003 whereby the commercial exporters have been allowed
the facility to claim sales tax refund under old sales tax refund rules 2000 instead of
refund procedure of 2002. The APCEA Chief also appreciated reduction in qualifying period of 3 years of export performance for allocation of 'gold' and 'silver' categories. The qualifying period has been reduced to one year from 3 years. This facility will provide an incentive to the new exporters who show good performance in a single year. EXPORTERS MUST CONSULT BEFORE FORMULATING QUOTA POLICY Chairman Pakistan Readymade Garments Manufacturers & Exporters Association (PRGMEA) Pervez Hanif has urged the Commerce Minister Humayun Akhtar Khan to take the garments exporters into confidence while formulating Textile Quota Management Policy for next two years. He urged that the Commerce Minister to provide 5% additional over programming quota for the period ending December 31, 2002. He also stressed that there should not be any auction of quota for the next two years. However, if there's no option available with the government but to auction quota in next two years then the growth quota, permissible under bilateral trade agreements, should be distributed on 50:50 basis. Elaborating this, he said 50% should go to the established exporters and the balanced 50% should be distributed amongst the small and medium as well as new entrepreneurs through auction to provide them a level playing field. He said the government should offer conducive environment to garment sector, which is a highly value-added sector, in order to make it competitive in the post WTO era. TMA OPPOSES CHANGES IN SECTION 73 OF SALES TAX ACT The Towel Manufacturers Association (TMA) has opposed the changes made in Section 73 of the Sales Tax Act which provides that input tax adjustments would not be allowed to the manufacturers if the exporter did not make payment of over Rs. 50,000 through a banking instrument. The new payment conditions attached to the Section would become effective after July 2003. The new payment conditions provide that if the payment made by the suppliers to the exporter did not match in bank account of both the persons the inputs earlier claimed by the former would not be allowed. It means that the manufacturers would also be at a loss to claim input tax paid on purchase of yarn and its subsequent processing into a finished product if the exporter did not pay within 120 days through a banking instrument. The Vice Chairman, TMA, Syed Muzammil Hussain, emphasised upon the EPB senior officials to ask the CBR to withdraw changes in the payment rules, which would result in substantial losses to the manufacturers, or indirect exporters who play an important role in the promotion of exports. COMMERCE MINISTRY TO CONTEST EURO-COTTON The Ministry of Commerce has taken necessary steps to fight the anti-dumping charge, levelled by the Eurocotton, a private trade association, and has engaged a lawyer in Brussels to plead Pakistan's case. The Export Promotion Bureau (EPB) sources have expressed hopes that the allegation would be proved false after the investigation carried out by the Anti-dumping Committee of the European Union (EU). Pakistan had fought such charges in the past effectively and had
succeeded in getting such duty removed in February 2002. PAKISTAN'S EXPORTS DEPICT 16.6% INCREASE IN JULY-DECEMBER Pakistan's exports increased by 16.6%, to $ 5.197 billion, during the first half (July-December) of the current fiscal year, as compared to $ 4.4578 billion in the corresponding period of last year. In December, exports registered 19.5% growth, to $ 862.8 million from $ 722.2 million of December of last year. The export target for this period was $ 917 million against $ 862.8 million of last year, showing 94% achievement. EXPORTS TO TOP 20 TRADE PARTNERS DROP BY $630 MILLION Pakistan's overall exports to its top-20 trade partners dropped by $630 million in the last financial year, mainly because of a global economic slowdown and uncertainty triggered by the US-led coalition's attack on Afghanistan. In 2001-2002, Pakistan's exports to 20 major countries amounted to
$7.35 billion, compared to $7.98 billion in the previous fiscal year. In last fiscal year, Pakistan's exports to the United States decreased by $59 million. Exports to Germany dropped by $43 million and exports to Hong Kong dropped by $62 million. APTMA FLAYS GINNERS ASSOCIATION’S DEMAND FOR TCP HELP Textile millers have strongly condemned the demand of the ginners who are creating panic by asking for the involvement of Trading Corporation of Pakistan (TCP) for buying raw cotton. The Chairman All Pakistan Textile Mills Association, Anjum Saleem, has issued a strongly worded statement, challenging the ginners report that the cotton crop size would be limited. The farmers are getting excellent return this year, as the demand is
high because of increased consumption capacity of the textile sector. He said the farmers are getting a better price of cotton despite the fact that the prices of Pakistani cotton are coming down in the international market and spinners are getting much lower prices of their products. TEXTILE TYCOONS FACE PROBLEMS IN CLEARANCE OF DUES Textile tycoons of the country have complained that due to red tapism of the Credit Information Bureau (CIB) of State Bank of Pakistan (SBP) they are facing serious difficulties in clearing their overdue payments to banks and financial institutions. Sources in the SBP disclosed that these tycoons are of the view that at present all banks and NBFIs obtain CIB report from the SBP before extending any financial assistance to borrowers. Banks and NBFIs reject the loan requests and even in some cases do not process the loan applications if CIB report of one of the group companies shows overdue on the plea that prudential regulations and rules of business had not allowed them to accommodate such borrowers. At present data produced by the Bureau was based on information received directly from financial institutions. These financial institutions were the only organisations entitled to receive information from the CIB. However, sources said tycoons have demanded that an immediate amendment be inserted in the rules and regulations and the name of banks be disclosed in the CIB report so that tycoons could know the exact amount and name of that bank, NBFIs which are wrongly reporting the cases to CIB. |
