Karachi, March 19, 2020: Zahid Mazhar, Chairman – All Pakistan Textile Mills Association, Sindh-Balochistan Region has demanded the government to take drastic measures to save export-oriented textile industry from the negative economic impact of Novel Coronavirus (COVID-19) as since its outbreak in mid-December 2019, has caused turmoil in the world’s second-largest economy, China, with a trickle-down effect on nearly all big economies including those of the European Union, United States, Japan and South Korea.
Zahid Mazhar in a statement issued to the press stressed the need for taking immediate steps by the Government of Imran Khan to address the major issues of the industry and exporters specially the liquidity problem otherwise all the measures taken by them for reduction in current account deficit would go in vein.
He demanded the government to release the backlog of sales tax refunds including deferred sales tax refund and payment of outstanding DDTO/DLTL as this is the money that belongs to the business and should speedily be returned to help uninterrupted operation of the industry enabling to sustain employment and exports.
He said that immediate payment of all refund and rebates is necessary due to delay in receipt of payment from domestic as well as international buyers in addition to cancellation of export orders even from big organizations and large scale buying houses and drastic slowdown in domestic market.
Chairman – APTMA Sindh-Balochistan Region said that the present situation needs special attention of the government to address problems of the trade and industry atleast for the period the recession would sustain due to Coronavirus. He demanded the government to restore SRO 1125(I)/2011 dated 31st December 2011 to provide relief to the five export oriented industries so that they may survive, play their role in the economic development of the country and earn much needed foreign exchange which is the need of the hour.
Zahid Mazhar commenting on reduction in discount rate by 75 basis points by State Bank of Pakistan said that it is too little and too late. He said that the discount rate in the regional competing countries lies between 4 percent to 8 percent, while discount rate has been reduced by United States of America to Zero Percent, Britain to 0.25 percent in sharp contrast with the present discount rate in Pakistan which is 12.5 percent.
In this scenario how can Pakistani exporters compete with regional competitors in the international arena. He demanded Governor State Bank to further reduce discount rate by another 300 basis points so that Pakistani exporters may compete with their regional competitors. In addition to the above Government should also issue directives to the banks to liberally extend additional lines of working capital to spinners in order to survive and avoid immediate closure of spinning mills.
Government should also help the textile spinning industry by freezing utility bills both gas electricity for atleast two months so that the industry may operate without any interruption in these difficult times and also to avoid mass unemployment of the workers.
Zahid Mazhar said that Spinning is the most important and fundamental industry for building a strong garment and value added textile industry in Pakistan but due to the step motherly treatment has lead them to think that government is not serious to recognize their importance as yarn is the most fundamental and basic requirement for any textile.
He said that availability of Export Refinance Facility is the most important for spinning industry as they are the ones who finance and provide yarn on credit to all textile value addition chains, store cotton for many months both through domestic buying and import from foreign suppliers.
Furthermore, due to cotton crop failure for the last five consecutive years, spinners are compelled to import costlier basic raw material of textile industry, therefore the refinance facility be provided also to the spinning industry on priority basis.
Zahid Mazhar said that the global textile producers anticipate a disruption to the supply chains since China accounts for a big part of the global textile production which creates a golden opportunity for Pakistani companies to grab a considerable share in the global market but the sector is already combating various challenges like liquidity problem due to delay in refunds and rebates, higher energy tariffs and the highest discount rate in the region.
Zahid Mazhar urged the government to come forward and prepare a contingency plan so that the textile industry may survive the turmoil caused by the Coronavirus.