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PBEA pleads for protecting ancillary industry.

PBEA Pleads for Protecting Ancillary Industry

Chairman, Pakistan Bedwear Exporters Association, Mr. Nasir Sheikh, has stated that the Prime Minister's call for rapid industrialisation and doubling of Pakistan's exports in the manufacturing sector in three years can only materialise if there is a rapid and dynamic change in government policies and a new direction in our textile policy is made.

In a telex to the Minister of Commerce, Mr. Malik Naeem Khan, he said textiles is the backbone of Pakistan's economy. It employs the greatest number of people and over 60% of our exports are from the cotton group. Despite the fact that Pakistan has been gifted with abundant cotton, the main thrust in the past has been to export raw materials in the form of raw cotton or cotton yarn, he added.

He said cotton yarn exports have continued to thrive mainly because our spinning mills are being provided raw cotton at below international prices which is usually between 30 to 50% below export prices of raw cotton. It is interesting to note that the export price of our raw cotton has nearly doubled in four years (from a unit price of USD 803.9 per million ton in 1985-86 to USD 1504.1 in 1989-90). The export unit prices of our cotton yarn has remained more or less static. Over the same period as cotton yarn prices registered a very nominal increase from USD 1.8 per kg. of USD 2.2 per kg. in the same period. This is despite the fact that a tremendous rise in electricity, wages and other inputs has taken place.

He said the export unit prices of our yarn have not increased along with international raw cotton prices is obviously because our spinning mills have an unparalleled subsidy being provided to them as they are supplied raw cotton at over 30% below our international export prices which is much to the disadvantage of both the ginners and the textile ancillary industries.

Pointing out that while the graph of yarn production has progressively rised with the setting up of new spinning capacity and production of yarn increased from 482 million kgs. in 1985-86 to around 882 million kgs. in 1989-90 the availability of cotton yarn for domestic ancillary industry has decreased.

In 1985-86, the production of yarn was 482 million kgs. and the local availability of yarn consumption by the ancillary industries was 252 million kgs. plus mill consumption of yarn was 46 million kgs. (total 326 million kgs.) for 67% was consumed domestically while around 33% was exported.

Presently exports of yarn are running around 38-40 million kgs. while production is around 80 million kgs. (December 1990 figures). This means we are now have a very unhealthy ratio. Between production and export being 50:50 which is giving a shortfall of cottony arn for the textile ancillary industries as well as the domestic population now faces a steep rise in clothing prices, he added.

He said there is a very strong and positive case for increasing export duty on yarn exports as no worthwhile gain is being established in exporting yarn at considerably low prices.

The viability and potential of our value-added industries is constantly being eroded. It is, therefore, necessary for the government to change its direction and provide some protection to textile ancillary industries and the power looms in the shape of increasing exports duty on yarn by Rs. 10 per kg. he demanded.
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Title Annotation:Business Opinion; Pakistan Bedwear Exporters Association
Publication:Economic Review
Date:Jan 1, 1991
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