Controversy over cotton yarn export continues
FAISALABAD (December 26 2009): Powerloom owners, disappionted over the decision of the Cabinet Committee on Textile about cotton yarn export have resolved to resume their agitation after Ashura and resort to strike from January 2. After wheat, sugar, gas and power shortages, Pakistan is now facing shortage of yarn, said to be the effect of export.
This is a basic raw material for value-added textile sector, and there is an increase in cotton yarn prices. Yarn exports continue surging, but sales of apparel, bed linen and cotton fabrics are declining, in sharp contrast with the boom experienced in the first sixteen months without quotas. Rising energy and financial costs would be behind the current difficulties.
The Cabinet Committee on Textile has announced withdrawal of the five percent import duty on yarn imports and Customs duty on import of cotton yarn, falling under Chapter 52 of the Harmonised Tariff Schedule, will be removed with immediate effect. The Cabinet Committee will keep yarn exports under review and may take corrective measures if exports cross the level of 50 million kgs per month.
Some quarters in the textile industry were pushing the government to ban yarn export, or at least tax it, after prices surged to an all time high level in late October. But officials, both at textile and agriculture ministries, continued to maintain that any such move would deprive cotton growers of an opportunity to get a reasonable return by exposing to a exploitation by industrialists.
APTPMA arranged a meeting immediately and discussed the cabinet committee decisions and further programme. The APTMA and KCA oppose the idea to impose ban on coarse yarn and cotton export while the PTMA, PTEA, PHMEA, APTPMA, APBUMA and PCPA castigate the decision of the committee in this respect.
The powerloom owners have decided to resume their called off agitation, after Muharram and shutter down strike from January 2, 2010. They said cotton yarn prices have surged by some 45 percent to Rs 840 per bundle during last one year. However, due to free trade under WTO regime the export of cotton yarn is on the rise, and the government is unable to restrict it.
Feroze Azam Chairman Pakistan Towel Manufacturers Association (PTMA), said "due to export of coarse yarn, our competitiveness and cost of doing business has been enhanced. We export quality towel by using our coarse yarn and due to shortage of raw material the towel sector was facing hardship to meet production cost".
M Jawed Bilwani, Chairman, Pakistan Apparel Forum and Pakistan Textile Exporters Association's Chairman, Khurram Mukhtar, a cluster of opposing textile segment, said after several meetings with the stakeholders reached an understanding that keeping in mind the severe complication faced by the domestic value-added textile sector due to non-availability of cotton yarn, such a decision is incomprehensible. He said the government is playing into the hands of the spinning sector and ignoring the largest foreign exchange and employment generator, the value-added textile sector.
Khurram Mukhtar, said exports of value-added textile items were time and again moribund over the last five months. He said that mere monitoring of LC conditions would prove totally hopeless and the handling and plotting should be undertaken. They demanded urgent counteractive and regulatory measures to save the value added sector from complete destruction.
Member KCA, Shakeel Ahmad said, "Our coarse yarn is cheaper in the world market with high quality and available at local market around Rs 30 per pound". He said in open market economy, there should not be any ban on export or import except ban on import of luxury items. He said around 75 percent of local yarn is used by the value addition sectors in the country and only 25 to 30 percent coarse yarn is exported to China, Sri Lanka, India, Bangladesh, Indonesia and Thailand. He demanded the government not to intervene and take any short term/ad-hoc measures because the consequences would not hurt the spinning industry.
Anwar Ahmed Tata, Chairman, APTMA said., "we believe in free trade and are not in support of any kind of control on exports of yarn. At this movement total requirements of spinning industry is about 15.5 million bales (170 kgs) per annum whereas average production of cotton in the country is 11.5 to 12.0 million bales.
"Unfortunately certain forces have sabotaged the textile policy. Pakistan is the fourth largest cotton growing country only due to lack of interest from the economic managers of the government and exploiters in the industry, lost its competitive edge. Our raw cotton and yarn is being freely exported without any planning, resulting in price hike in domestic market and our competitors are enjoying comparatively cheaper price supplies from Pakistan. We request the competent authorities of government to realise gravity of the situation and take remedial measures on emergency basis".
Cotton economy for the last 10 years had been operating on the basis of market forces after the then commerce minister, Razak Dawood, allowed duty-free import and export of textile raw material. A number of suggestions were floated by the value-added sector, including imposition of duty on export on cotton and cotton yarn to those countries which compete with them in the world market. Other proposals were of fixing ceiling on exports at the level of previous year or giving refinance on local sale of course yarn under 32 counts. Similarly, it was also suggested that spinners should also be given refinance on export of fine yarn. However, these suggestions were turned down by the spinners, as a result the meeting remained inconclusive.
Looking at the situation, the sources said the minister was left with no choice but to come up with some administrative measures. The approval would be sought from the Cabinet meeting to take legal action against hoarders and profiteers of cotton yarn but still no action on remove the crises.
The President FCCI Sh. Abdul Qayyum said that due to the unlimited export of yarn, the weaving sector is facing acute shortage of yarn. Resultantly, the power loom sector is forced to shutdown their units, which will lead to unemployment of thousands of labour. He further disclosed that Faisalabad is a labour intensive city and hundred thousand of the labourers running their kitchen by their earnings from the powerlooms sector.