Points for Survival / Revival of the Textile Industry - APTMA
Tuesday, March 13, 2012
Mr. Tariq Mehmood, Chairman APTMA forwarded the following points regarding survival/revival of the textile industry for representation to the government in the forthcoming meetings. All Textile companies are requested to kindly review it and give their input please.
1.BANKING ISSUES
A-Repayment of Long Tem Loans:
Financial Institutions (including Leasing Companies, Banks, Islamic Banks, Investment Banks) should be directed to restructure all outstanding Term Loans (including LTF loans) of the Spinning/Weaving Industry. Amount outstanding as on JAN 1st, 2008, should be payable in 10 QUARTERLY installments beginning after a grace period of 2 years.
B-Repayment of Markup up to 30th June-2010:
Markup payable to the banks up to 30th June 2010 to be to be accrued allowing the industry to repay the same to the banks in 10 quarterly installments starting 1st July-2010. This will allow some breathing space to the industry.
C-Interest rate relief to spinning industry on investment already made:
Vide MFD Circular No. 06 of 2007 dated 30th Oct-2007 issued by State Bank of Pakistan, the textile spinning sector was extended 3% interest rate subsidy on Long Term Financing against fixed assets only obtained from Scheduled banks for one year. The State Bank of Pakistan has stopped 2nd part of the six monthly payment of this subsidy since 24-06-2008.
ECC has approved the payment and also extended the interest rate subsidy to the spinning sector for further one year up to December 2009.
It is requested that the payment of concessional rate of markup be immediately made to the industry. State Bank of Pakistan to issue circular to the banks in this respect.
D-Concessional Rate of Financing for Procurement of Raw Material:
Raw cotton constitutes approx 70% of the cost of yarn. The failure of the Ministry of Agriculture over the last eight years to introduce an approved Bt cotton and increase cotton production is the biggest reason for the crisis in the textile sector. The cost of procurement of cotton is likely to increase further this year as the commodity prices reach new pinnacles in the world. It is recommended that a "cotton purchase facilitation" finance not exceeding the rate of refinance of the state bank of Pakistan be allowed to purchase cotton for one year.
E-Zero Rating of Basic Textile Industry:
The textile spinning & weaving industry is currently under severe crisis. It is recommended that the duty draw back scheme for the industry be revised to compensate high cost of doing business due various taxes/levies/duties be zero rated. This will not only revive the ailing spinning and weaving industry but also assist the value added sector to price their products more competitively.
F-Investment under BMR and Expansion:
In order to encourage investment under BMR and expansion spinning machinery electricity generators for captive power be allowed under LTFF scheme of the State Bank of Pakistan.
Woven Garments
The narrow width weaving industry is generally targeted to produce apparel grade fabric. Due to lack of sufficient dyeing and finishing of this type of fabric the garment industry for apparel has not developed. It is proposed that the investment in narrow width dyeing and finishing be supported. in addition, the export of woven garments may be supported.
A cover for exchange fluctuation upto 5% may be made available in case of loans in foreign currency for both short term and long term loans during the period of the loans.
2.ENERGY
A-Currently textile industry is enduring total disconnection of gas supply to textile industry on gas based generation since last 18 days by SNGPL on Cluster based gas load management program. Only textile industry/captive power is being targeted for gas supply disconnection.
Similarly, textile industry is also enduring electricity load shedding from 10 to 16 hours daily by PEPCO.
a)It is submitted that gas supply to the textile industry be restored immediately. And for future gas load management program rotational policy be followed and cluster based policy being textile industry biased be discontinued.
b)100 MMCFD gas supply be obtained from SSGC network and this quantity be made available for running the textile industry.
c)Priority of the textile industry being export oriented and continuous process be followed by SNGPL for gas load management
d)Electricity load shedding b e exempted to the textile industry on independent and grouped feeders with immediate effect.
B-Energy efficiency initiative taken by various organisations be rationalised and expedited on fast track basis to achieve desired objectives.
3.RAW MATERIAL
A-BT Cotton:
Bt. cotton production be introduced on fast track basis by acquiring renowned technology.
India used to be one of the lowest cotton yields country and now has become an exporter of cotton. Benefits of introducing Bt. cotton in India are:
- increased yield up to 50 per cent,
- reduced insecticide sprays by half,
- improvement in environmental and health implications, and
- Increased income by up to $250 or more per hectare,
- Contributed to social benefits and the alleviation of poverty.
To achieve 20.70 Million bales by 2015 it is proposed to ensure fast track introduction of Bt. cotton.
- Pakistan needs to replicate effective enforcement of intellectual property right laws. The country will essentially protect its own interests by providing a conducive environment in terms of IPR to the investors / technology providers.
- Ensured effective, science-based and transparent enforcement of biosafety regulatory frameworks.
- Curb piracy. Last year, 80% of cotton acres in Sindh and 50% in Punjab were under unapproved Bt Cotton varieties.
- Plant Variety Protection law (Plant Breeders Rights Act) needs to be put in place.
4.TAXATION
A-Rationalization of Taxes:
a)With holding tax on export to be reduced from 1% to 0.25 % for at least one year.
b)Collection of EDF to be immediately abolished.
c)To encourage investment in textile industry 20% tax credit regime be introduced
B- Sales Tax Refund:
Procedure for sales tax refund needs to be rationalized and the textile sector being an industry and backed by assets worth millions of rupees, be given priority .
5.INCENTIWISE MERGERS AND ACQUISITIONPakistan textile industry appears to have failed to compete in international market because of in-adequate availability of cotton loc ally, high cost of production, shortage of power to run the plants, rising utility cost and cost of other inputs. Therefore, the textile sector is loosing the benefits of economies scale and suffering from inefficiencies.
6.HUMAN RESOURCE DEVELOPMENT
Human resource development programs need to be initiated on a fast track basis. Our women workforce in rural areas needs to be targeted to enter skill training programs.
- Enrich human resource skills and capabilities, with special emphasis on those working in the decentralised sectors of the Industry; and for this purpose to revitalise the Institutional structure;
- Human resource development programs of international level be initiated in Spinning, processing, Weaving, Garmenting and Marketing
- Women workforce in rural areas for garmenting need to be targeted to enter these programs by establishing training institutes
- Assistance offered by international agencies (i.e. JICA, UNIDO, etc.) in human development programs be utilized for the benefit of the industry.
Labels: Economic and Business
posted @ 12:37 PM,
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Economic and Business Updates - From 3rd to 9th January, 2011
Wednesday, January 12, 2011
- The government reverses the recent hike in petroleum products prices bringing them back to the October 31 level.
- The government requests the European Union Commission to redirect half of the 114 million euros grant, allocated for reconstruction and rehabilitation of flood-hit areas, to budget support.
- The country is facing the worst- ever inflation of its history after 1970, primarily because of fiscal indiscipline and borrowing from the State Bank to meet the deficit.
- The US will provide $190 million to the Damage Compensation Fund for rehabilitation of flood-affected people in Pakistan.
- The Asian Development Bank, International Finance Corporation, Citibank and Muslim Commercial Bank announce completion of a trade transaction that will help boost textile industry in Pakistan.
- The Trading Corporation of Pakistan provides a list of eight sugar mills of influential politicians to the federal government. These mills allegedly defaulted on delivery of sugar resulting in crisis of the commodity in the market.
- The recent devastating floods pushed the country to import over 60 per cent more pulses in the last five months to avoid possible food shortage in the country.
- The ministry of industries and production fears a serious shortage of urea fertiliser across the country after government’s fertiliser import plan fails to materialise.
- The government, in an effort to stabilise onion prices, bans its export to India via land route, while the same will continue through sea route.
- The ministry of textile industry allows drawback facility of local taxes and levies to textile units in the Export Processing Zones.
- Basmati rice export records a growth of 21 per cent at 0.534 million tons during the first six months of fiscal 2010-11, earning higher foreign exchange at $435 million.
- The government fails to reduce the non-interest current expenditure during last two years and resorts to easy option of slashing the development expenditure.
- The agriculture department of Punjab claims that 95 per cent wheat sowing target has been achieved against the total target of 16.89 million acres.
- A Big gap between demand and supply is likely to stay because cotton crop harvesting is still short up to 14.17 per cent at 10.24 million bales as against 11.93 million during the corresponding period of last year.
- The manufacturing of textile products registers a decline of 10.2 per cent during the first four months of the current fiscal year owing to price fluctuation in international market.
Labels: Economic and Business, Pakistan Economy
posted @ 4:44 PM,
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Money Market, Forex and General News 04-03-2009
Tuesday, March 3, 2009
Money Market:
- Money market opened at 10.5 percent. Overnight repo rates topped at 13 percent while bottom was 9.70 percent. Market closed at 13 percent.
Forex:
- Inter bank market opened at 79.85 & 79.95 but rupee shortly shot up over “80” due to buying pressures.
- Market topped at 80.12 while went as low as 79.90.
- Rupee got devalued against US dollar and closed at 80.10 & 80.15 at the end of the day, losing twenty five basis points at bid and twenty points at offer side.
General News:
- IMF has agreed to release second tranche of $840 million to Pakistan in addition to setting new targets for FY 09-10. Country would be required to maintain a GDP growth rate at 4 percent, Fiscal Deficit 3 percent and inflation at 6 percent in next fiscal year.
- Country’s budget deficit in first six months of FY-09 has surpassed Rs 250 billion spot.
- Total revenues of Federal and provincial governments stood at Rs 834.47 billion while Expenditures ran over trillion to Rs 1.085 trillion.
- The rising deficit has been quite a nuisance for the government and is determined to cut development expenditures to bring the deficit down.
- United States’ insurance giant American International Group (AIG) has posted a quarterly loss of over $60 billion and would immediately need $30 billion in fresh capital from US treasury.
- The group was bailed out last year and got commitment of $150 billionfrom U.S government, which made government a major shareholder of 80 percent in the group.
Labels: Economic and Business, Pakistan Economy
posted @ 5:24 PM,
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Economic and Business Updates - February 16 to March 01, 2009
Monday, March 2, 2009
Foreign exchange reserves fell by $210 million to $10,166 million in the week that ended on Feb 21, the central bank reveals.- The Royal Bank of Scotland announces that the new owner of the RBS is being explored in Pakistan. The RBS is the hardest hit bank in Europe.
- The Asian Development Bank will provide $500 million ahead of the next budget and has expressed its willingness to double its annual assistance to $3 billion as requested by Pakistan. It also agreed in principle to finance the Bhasha-Diamer dam project.
- The government will be providing Rs30 million subsidy on imported wheat by the end of June in an effort to give some relief to consumers.
- The State Bank announces extension of three per cent markup subsidy for the spinning sector by one year to facilitate the textile sector.
- The International Monetary Fund has scaled down Pakistan’s growth rate at 2.5 per cent and tax revenue at Rs1300 billion, Advisor to PM on Finance Shaukat Tarin discloses after discussions with the IMF.
- The State Bank of Pakistan announces operational mechanism for microfinance credit guarantee facility.
- Pakistan may get a loan of $948 million from China, Saudi Fund for development and Islamic Development Bank to meet 58 per cent of the total cost of the 969 MW Neelum-Jhelum hydropower projects.
- Cotton ginners ask the Federal Board of Revenue to exempt ginning factories from the status of withholding agents and demand zero rating facility on composite units of these factories.
- More of the 600 private companies in 30 different sectors of the economy attract $1.58 billion during first seven months (July-January) of the current fiscal year, Boi sources disclose.
- The Federal Board of Revenue may discontinue the existing policy of extending special tax zero rating facility to different manufacturers on consumption of electricity and natural gas.
- The Sindh Food Department finalises arrangements to begin procurement of 1.2 metric tones of wheat by March 1, 2009 say sources.
- Disbursement of credit to the agriculture sector by commercial and specialized banks increases by 11.48 per cent to Rs116.77 billion during July-January period of the current fiscal against Rs104.775 billion during the same period last fiscal, depicting an increase of Rs12.022 billion.
- Allocation for projects under public sector development programmed during the second half (January-June) of the current financial year ay further be slashed to the tune of Rs70 billion, it is learnt.
- The finance ministry allocates Rs4 billion for disbursement towards research and development outstanding claims for a period from June 26 to 30, 2008.
Ref: Dawn -Economic and business updates dated 02-03-2009
Labels: Economic and Business, Pakistan Economy
posted @ 11:00 AM,
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Indices Used To Measure Inflation
Tuesday, January 13, 2009
When prices of most goods and services are rising over time, the economy is said to experience inflation The percentage increase in the average level of prices over a year is called the inflation rate. Inflation can impose high cost on economies and societies, can disproportionately hurt the poor and fixed income groups, can create uncertainty throughout the economy and can undermine macro economic stability.
Different price indices are used to measure inflation. A price index is a measure of the aggregate price level relative to a chosen base year. In Pakistan a consumer price index (CPI), a sensitive price indicator (SPI) and a wholesale price index (WPI) are compiled. They commonly have the base year 2000-01.
CPI is a main measure of price changes at retail level. It indicates the cost of purchasing a representative fixed basket of goods and services consumed by private households. In Pakistan CPI covers the retail prices of 374 items in 35 major cities2 and reflects roughly the changes in the cost of living of urban areas.
SPI shows the weekly change of price of selected 53 items of daily use consumed by those households whose monthly income in the base year 2000-01 ranged from Rs.3000 to above Rs.12000 per month. SPI also informs about the actual position of supply: whether the commodity is available in market or not. If the commodity is not available, the reason for that is also recorded. SPI is based on the prices prevailing in 17 major cities and is computed for the basket of commodities being consumed by the households belonging to all income groups combined as in CPI.
WPI is designed for those items which are mostly consumable in daily life on the primary and secondary level; these prices are collected from wholesale markets and also from mills at organized wholesale market level. The WPI covers the wholesale price of 106 commodities prevailing in 18 major cities of Pakistan. Through its own staff and voluntary co-operation of government departments, autonomous bodies and private agencies FBS receives the wholesale prices from various areas in Pakistan. The prices are usually reported on monthly basis. WPI covers 425 items, divided in five major commodity groups viz (i) Food, (ii) Raw material, (iii) Fuel, Lighting and Lubricants, (iv) Manufacturing, (v) Building material. So, for many of the commodities more than one specification and markets have been used to have average prices.
Hence, all three indices are needed to quantify inflation for the economy as a whole. In Pakistan as well as in most countries, the main focus for assessing inflationary trends is placed on the CPI, because it closely represents the changes in the cost of living.
CPI, SPI and WPI for the year 2008-09 have increased by 24.43%, 30.96% and 27.98%respectively over the corresponding period of 2007-08. It increased by 8.01%, 11.03% and 10.26% respectively, in 2007-08 over the corresponding period of 2006-07 and in 2006-07,
increased by 8.39%, 11.80% and 7.80% respectively over the same period of 2005-06.
Ref: Federal Bureau of Statistics
Labels: Economic and Business
posted @ 10:35 AM,
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Economic and Business Updates - January 05 to 11, 2009
Monday, January 12, 2009
The government is to increase margins of oil marketing companies and petroleum dealers by 12.5 percent and 25 percent per liter respectively as both the stakeholder have given tough time to Islamabad after reduction in their profits.
The banking industry deposits witness a significant decline of Rs124 billion in the third quarter of 2008, despite relatively steep rise in weighted average return on deposits, say industry sources.
Banks approach the competition commission of Pakistan for condo nation of time period in filing of appeal against the commission’s order on imposition of penalty.
Global recession and emerging deflation in developed countries start affecting Pakistan’s exports, which are gradually declining since October. Though, exports of the country during the first five months (July-November, 2008) increased by 11.88 percent, trend shows the exports are sliding downwards.
In a policy shift, the government is to review the prices of petroleum products on a monthly basis, instead of fortnightly, aimed at bringing stability to the market and minimizing consumer’s problems, sources in the Finance Ministry disclose.
The Indian government imposes 12 percent cuties on cement import, which is aimed at curbing cement import from Pakistan, industry sources say.
Prime Minister Yousuf Raza Gilani directs the Ministry of Petroleum and Natural Resources to arrange uninterrupted supply of oil and gas to IPPs for optimal supply of power.
RICE exports cross record $1.18 billion mark in the first six months of the current fiscal year, says chairman of Rice Exports Association Abdur Rahim Janoo.
The Finance Ministry has achieved all IMF targets including two per cent fiscal deficit by end of December, 2008, and tax collection is likely to touch 10.5 percent of GDP as discussed and agreed, says adviser to PM on Finance Shaukat Tarin.
The Asian Development Bank underlines the need for improving international controls and internal audit in both Punjab health department and at district government level for improving transparency and accountability in the use of public resources and ensure that fund leakage in minimized.
The Utility Stores Corporation starts selling urea fertilizer to check black marketing and facilitate the growers and farmers community.
The Ministry of Industries is grilled by the Economic Coordination Committee of the Cabinet for seeking company specific incentives through revised letter of Intent (LOI) after federal Board of Revenue raised eyebrows on the issue, say official sources.
Finance Minister concedes that monetary overhanging from the unprecedented government borrowing from the State Bank of Pakistan for budgetary support will continue to frustrate the decline in imported inflation.
Phutti arrivals into ginneries rose by 6.91 percent at 9.745 million bales in the fortnight ended December 31, 2008 when compared with 9.115 million bales in the same period last year.
Source: Dawn - Economic and Business Review dated 12-01-2009
Labels: Economic and Business
posted @ 10:49 AM,
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Economic and Business Review - Last week
Monday, January 5, 2009
THE National Investment Trust (NIT) formally launches Rs20 billion NIT state Enterprise Fund (NIT-SEF).
State Bank of Pakistan issues new guidelines for home remittances-related agreements of exchange companies with foreign entities.
PAKISTAN announces five percent tariff reduction in the existing customs duty on import of around 4,803 items from Saarc member countries Srilanka, Bangladesh, Bhutan, Nepal and Maldives under the Trade Liberalisation Programme agreed in South Asia Free Trade Area (Safta) agreement.
PAKISTAN will have to face the worst load-shedding during the first two weeks of January amid dried up water resources due to canal closures for the purpose of desilting, say sources in Pepco.
THE procurement price of wheat in the domestic market is higher than the prevailing price in the international market, says Mr. Shahid, additional secretary, ministry of food and agriculture.
PAKISTAN is to receive $500 million tranche during this quarter (Jan-March), says Adviser to PM on Finance Shaukat Tareen.
PAKISTAN and Iran fail to reach accord on gas price on the Iran-Pakistan-India (IPI) gas line project during talks held in Tehran.
Quetta Electric Supply Company (Quesco) announces 50 percent cut in power supply to 13 towns and cities of Balochistan from January 1.
THE government approves an average increase of 7.5 percent in gas prices, but rejects the oil and gas Regulatory Authority’s proposal to cut petrol price.
State Bank Provides 90 days waiver for availing financing under export finance scheme (EPS) to all exporters whose export proceeds are overdue till date of issuance of the new circular.
THE government allows export of live animals against foreign currency after a squabble between the commerce ministry and the newly created ministry of live stock and dairy development, it is learnt.
IRAN is to build a dedicated 1000 MW capacity gas based power plant on its border to export electricity to Pakistan, says Minister for Water and Power Raja Pervez Ashraf.
THE Economic Coordination Committee (ECC) of the cabinet, meeting under the chairmanship of adviser to prime minister on finance Shaukat Tareen, takes serious notice of no reduction in commodity prices despite drastic cut in oil and palm oil prices in the international market.
State Bank launches the Banking Sector Strategy (BSS) formulated for the next decade mainly carrying intensive banking reforms.
Source: Dawn - Economic and Business Review dated January 05, 2009
Labels: Economic and Business
posted @ 11:06 AM,
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