Central Chairman of Pakistan Yarn Merchants Association (PYMA), Muhammad Usman, on Monday appealed to Federal Finance Minister Ishaq Dar to save the downstream textile industry.
In a letter to the finance minister, the PYMA chairman pointed out that the local manufacturers of polyester filament yarn can only meet the needs of local downstream industry to the extent of about 25 per cent. Despite the fact that investigation into injury is currently underway by the National Tariff Commission to review anti-dumping duty, local manufacturers are lobbying very hard to impose regulatory duty.
The PYMA chairman said these attempts by the local manufacturers will put the entire weaving and knitting industry in a grave situation by increasing the cost of their basic raw material (yarn), thus making the entire downstream industry uncompetitive. Results will be disastrous for the exports which are already suffering on account of high energy costs.
“The not so noble intentions of the few local manufacturers are self-evident. They want to create a monopoly like situation to give themselves short term benefits at the expense of the very large downstream sector, which employs millions of people and is the backbone of our economy,” he added.
It is pertinent to note that in 2008 NTC had imposed anti-dumping duties (Max 18%) on the filament yarns originating from Thailand, Malaysia, Korea and Indonesia. At that time, there were about 17 local manufacturers of polyester filament yarn and there was no import of polyester yarn from China.
Despite the fact that the anti-dumping duty was levied for over eight years, the number of local manufacturers shrank into four units and their market share decreased. The long-term solution for local manufacturers is to modernise and upgrade their plants and enhance capacity to achieve economies of scale. RD is not the right solution.
He further asked the government to put import of fabric from Dubai on negative list as no weaving/knitting factories exist in Dubai. The Indian fabric is simply being routed through Dubai.
While giving some suggestions to resolve the conflict over imposition of regulatory duty on polyester filament yarn, he advised the government that fabric imports from any part of the world should be allowed under legal channel of import which includes Letter of Credit (LC) or Documents Against Payments (DP) because the goods payments via banking channels can save the local downstream industry.
The PYMA chairman further stated that textile package was envisioned by the government of Pakistan in 2005 in which all stakeholders agreed that in order to bring fabric trade under legal umbrella, the maximum duty on fabric should not exceed 15 per cent. Hence, the duty on yarn was fixed at 7 per cent but over the years, the duty has escalated to 11 per cent without any reason, causing distortions and making raw material for the downstream industry more expensive.
“We suggest that the yarn duty should be rolled back to 9 per cent to give benefits to the weaving and knitting industry,” he added.