Textile export declining due to severe energy crisis

LAHORE: Exports of the country has declined by about 15 percent in April compared to previous month despite free-market access to EU countries under GSP Plus facility, as challenges like prolonged power and gas load shedding, high interest rate and severe liquidity crunch have not been addressed by the government.

The Pakistan Readymade Garments Manufacturers & Exporters Association (PRGMEA) (NZ) Senior Vice Chairman Jawwad A Chaudhry has expressed grave concern over the sharp decline in exports and urged the government to take serious cognizance of the issue.

He said this drop on exports would have dire impact on economy which is already under pressure of the current account balance.

He said that sudden surge of around 10% in rupee value against the dollar has disturbed the business cycle of entire textile chain and put a direct inventory loss of billions of rupees. Due to this depreciation, cost of doing-business could not decrease and have sky rocketed.

He said that around 30 percent working capital of value-added textile industry is already stuck-up in refund regime creating severe liquidity crunch.

He expressed resentment over the federal government’s expected move to slap five percent sales tax on export, saying the heavy taxation will prove fatal to the export-manufacturing sector.

He said that increase in sales tax on exports will surely be one more nail in the coffin of exports of our nation.

Jawwad Ch said that the value-added textile exporters are financially subdued from growing power, gas and water tariffs. He said the government instead of improving supplies of utilities to the industrial units is planning to increase sales tax to put the manufacturing sector to another financial disaster.

Jawwad Ch said that the soaring tariffs of electricity, gas and other essential raw materials, are leading to high cost of business in Pakistan further hardening the competition against competing countries.

PRGMEA leader said that a huge amount of exporters is blocked in sales tax refund claims amounting to billions of rupees; customs rebate claims of billions of rupees and billions of DLTL claims which are held up by the government for long period.

He said that despite 10 percent appreciation of rupee, the government increased tariffs for all basic utilities for industrial units. He lamented that the government is not extending relief to the export-oriented units.

He said that policymakers are not serious in resolving power and gas supply issue of the textile industry. Instead, he lamented that the available gas is being supplied to the unproductive sectors and segments, causing a loss in terms of foreign exchange. Situation is becoming unbearable for industry and a constant inefficiency is plaguing the viability of production units.

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