KARACHI: Textile millers on Thursday demanded the government to take drastic steps to save the export-led textile industry from the negative economic impact of the novel coronavirus.
All Pakistan Textile Mills Association Chairman (Sindh-Balochistan) Zahid Mazhar said the virus’ outbreak since 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, the United States, Japan and South Korea.
In a statement issued by the association, he demanded the government to speedily release the backlog of sales tax refunds including deferred ST refunds and payments of outstanding DDTO/DLTL to the exporters to help continue uninterrupted business operations to sustain employment and exports.
Mazhar said an immediate payment of all refunds and rebates was necessary due to delay in receipt of payments 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.
He was of the view that the present situation required special attention of the government to address problems of trade and industry at least for the period the recession would sustain due to the virus.
The APTMA’s office-bearer demanded the government to restore SRO 1125(I)/2011 dated December 31, 2011 to provide relief to five export industries.
Commenting on recent reduction in policy rate of 75 basis points by the State Bank of Pakistan, he said the reduction was too little and too late.
He said the discount rate in other regional countries lies between 4pc to 8pc; the United States has brought it down to zero per cent; while Britain announced 0.25 per cent contrary to Pakistan where it stood at 12.5pc after recent cut.
“How can Pakistani exporters compete with their regional competitors in the international arena,” he questioned and demanded the Governor State Bank to further reduce the discount rate by another 300bps so that Pakistani exporters might compete with their regional competitors.
Mazhar further urged the government to issue directives to banks to liberally extend additional lines of working capital to textile spinners to survive and avoid immediate closure of spinning mills.
“The government should also help the spinning industry by freezing utility bills for both gas and electricity at least for two months,” he suggested.
The textile miller said the availability of the Export Refinance Facility (ERF) is the most important for the 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 the textile industry, therefore the refinance facility be provided also to the spinning industry on priority basis, he said.
