Textile exporters seek 5pc higher margin on dollars

KARACHI: Value-Added Textile Forum on Saturday demanded the government to fix the dollar rates for exporters and allow a 5 percent increased margin for both export-proceeds and home remittances to enhance business confidence.

Value-Added Textile Forum said the exchange rate for exports, imports and remittances was not uniform in various countries. “Exporters are given priority and preference while the forex rates for importers are usually one dollar higher than export,” the forum said in a statement.

The rates to import industrial raw material and essential commodities should be normal whereas the import rate for luxury and all non-essential items should be comparatively on the higher side, it added.

Expressing disappointment over the high cost of manufacturing amid a fragile economic outlook, Pakistan Apparel Forum Chairman Jawed Bilwani urged Prime Minister Shehbaz Sharif and Finance Minister Ishaq Dar to take notice of the situation. He said the country could face a law and order situation if the problems of exporters, including sales tax refunds, export financing rate and energy issues, were not resolved as massive layoffs would become inevitable because of the liquidity crunch.

Export-oriented industries have been purchasing costly inputs, which has exorbitantly increased the cost of manufacturing, making the industry “unviable”, he said. Trade of cotton yarn and cotton has become stagnant.

Duty drawback on local taxes and levies (DLTL), an active ingredient of Textile Policy to facilitate exporters and an essential component of cost of production to enhance exports has also been suspended, he said, adding that all issues combined, Pakistan’s value-added textiles were becoming uncompetitive. Bilwani, who is also the chief coordinator of the Value-Added Textile Forum, said that the ever-increasing liquidity pressure and problems faced by exporters have multiplied their grievances and have also ruined their viability to operate export industries.

Pakistan’s exports were losing to regional competitors as the prevailing cost of manufacturing was the highest in the region. “How can the export-industries operate without earning even nominal profit? Can any business survive without profitability?” he asked.

“Just in order to secure and maintain their business relations with foreign buyers, the textile exporters have been compelled to do their businesses on a cost-to-cost basis. Nonetheless, every coming day, exporters are facing challenges to meet the cost to operate and survive,” the statement said. According to WTO's Ease of Doing Business Ranking 2020, Pakistan is ranked at the 108th position, which perhaps has sunk downward further. As per global survey respondents for textile manufacturing countries in Asia, for cheap manufacturing costs, currently, India, China and Vietnam are ranking in the top three positions respectively.

Bangladesh is 6th and Sri Lanka is 10th in ranking, while Pakistan is missing in such a recent survey owing to daily increasing cost of manufacturing amid instability in the local currency and economic indicators.