Daily Times, Pakistan
Staff Report
KARACHI: Polyester Staple Fibre Manufacturers Group said Thursday that allegations made by certain quarters within the textile sector are far removed from the ground reality and that the bare minimum import tariff of 6.5 percent only serves to provide a level playing field opposite other regional manufacturers.
It said the import tariff of 6.5 percent only aims to mitigate the impact of the incremental cost of doing business in Pakistan versus other regional manufacturers.
It said in a press release sent here that the incremental cost of doing business in Pakistan can be attributed to poor infrastructure which translates into higher logistics cost, costly port charges on liquid chemicals and unreliable power supply, under developed vendor industry for engineering goods, high labour cost due to low productivity, underdeveloped upstream chemical industry necessitating import of chemicals requiring high financial costs and additional freight charges, multiple taxes and the relatively higher cost of borrowing.
It added that prices of PSF in Pakistan are at the lower end in the region as the average domestic prices of PSF in 2014 were Rs 95.6/kg in India, Rs 92.3/kg in China, and Rs 90.4/kg in Pakistan. It is a fact that PSF industries of each of these countries are protected by similar levels of import tariff. There is no zero tariff in any of these countries. Exports in Pakistan are actually zero rated as the domestic textile downstream enjoys the facility of DTRE through the entire chain. This facility, available for PSF users as well, allows exporters to import their raw materials duty free.
The consumption of Man Made Fibre (MMF) in Pakistan is lower in comparison with developed nations, however very much like other developing nations. And the reasons for lower consumption of MMF in Pakistan can be attributed to low demand for industrial textiles and non-textiles applications (e.g. auto industry, geo textiles, etc.), lack of marketing and technical skills in the textile downstream, lack of machinery (in the textile downstream) for high end products, perception of Pakistan’s textile sector as a producer of low end products and so on. The domestic PSF industry has in the past introduced numerous specialty variants of PSF, but the textile downstream was simply not equipped to successfully produce and market specialty products which would utilize these variants. Furthermore, PSF per capita mill consumption of Pakistan is actually higher then India at 3.12 kg versus their 0.64 kg.
The group said the domestic textile sector must recognise the fact that there is a myriad of real issues and problems that they need to address in order to improve the industry’s performance as opposed to relying on the government to bail them out every year.
