The All-Pakistan Textile Mills Association (APTMA) on Friday warned that the country’s textile exports could fall below $1 billion a month from 2023 onwards, blaming the variety of issues for the sector that is currently operating at less than 50% capacity utilization.
In a letter addressed to Prime Minister Shehbaz Sharif dated December 23, 2022, APTMA’s Patron-in-Chief Gohar Ejaz stated that the current state of the world economy has been primarily caused by the Ukraine crisis combined with the floods in Pakistan have combined to formulate the perfect storm for our economy.
“Across the country, the textile industry is currently using less than 50% of its capacity. If corrective action is not done quickly, a very significant number of jobs have already been lost and many more will do so.”
In its letter, APTMA attributed the decline to supply chain disruptions, liquidity constraints, energy shortages, and non-functioning of new projects.
APTMA said recent floods destroyed the cotton crop with only 5 million bales available this year while the industry requires 14 million bales.
Meanwhile, the import of cotton and other necessary inputs for exports has been restricted due to foreign exchange problems. According to the statement, delays, demurrage, and detention have caused a 20% cost rise.
“Clear all imports from export-oriented sectors that have arrived at the destination, whether they were paid for with cash or against Letters of Credit (LCs).” APTMA said.
It stated that export-oriented sectors should be given priority and be exempt from import controls, allowing LCs for raw materials, machinery, spare parts, and other items to restore industry’s supply line, and refunding all demurrage and detention charges incurred by EOU Sector to maintain competitive costs for exports.
On liquidity constraints, APTMA said that a much higher quantum of funds is stuck in work in progress as a consequence of a 17% sales tax and devaluation on all inputs.
APTMA called for the restoration of SRO 1125, zero rating for the textile value chain while collecting sales tax on domestic sales at the point of sale. It urged to immediately refund all deferred sales tax, tuff and other dues.
The body said that the government should also provide the textile sector with a moratorium on capital repayment from July 1st, 2022 to June 30th, 2023.
