Mills to remain closed as association protests rising cost of production.
KARACHI: All Pakistan Textile Mills Association (Aptma) – one of the most powerful business lobbies in Pakistan -has announced that it will observe a ‘black day’ on Wednesday by shutting down factories across Pakistan.
The strike, to be observed for one day, comes as Aptma members lament the increased cost of production made worse by the power crisis. Around 400 member mills are expected to be closed during the period.
“Our members are facing a serious crisis. We want to tell the government that we cannot move forward in the current circumstances because the rising cost of production is unbearable,” Aptma Chairman Tariq Saud said during a press conference.
It is expected that the government will announce the textile package in the coming weeks, however the organisation wishes to improve the pace of the process.
“Shutting down factories for a day is not to pressurise the government to expedite the textile package. It is just to show the government that the situation is alarming,” said Saud, when asked whether this protest is aimed at pressurising the government to announce the upcoming textile package.
The situation is fast turning into a crisis because about 25% of our members have already closed down their factories, he added.
Aptma had also called a strike on August 7 to protest the rising cost of production before the association deferred the call until the first week of September.
Aptma says the current government has burdened the textile industry with Rs38 billion in Gas Infrastructure Development Cess (GIDC), Rs78 billion in electricity surcharge and Rs65 billion in innovative taxes. The total impact of this burden comes to around 12% of total sales of the industry.
Due to the levy of GIDC and increase in gas tariffs, the cost has reached to $6.7 per million million British thermal unit (mmbtu) compared to $4.2 mmbtu in India, $3.1 mmbtu in Bangladesh and $4.2 mmbtu in Vietnam, he said, while building his case on the rising cost of production.
The Aptma chief also said that electricity tariffs in Pakistan are the highest in the region. For instance, average electricity prices among the regional countries are in the range of 6 to 9 cents which is 14.5 cents in Pakistan.
Threat of competition
Moreover, the other issue that has not sat down well with Aptma members is the import of cotton yarn in Pakistan. At present, there is 5% duty on cotton yarn import in Pakistan while it is 28% in India, which is why Pakistan cannot export cotton yarn to its neighbour.
According to the Aptma chairman, Pakistan’s textile export share in the global market has decreased from 2.2% to 1.8% during 2006 to 2013, whereas the exports share of regional competitors enhanced by 75%. During the same period, Bangladesh’s share jumped from 1.9% to 3.3%, China’s share increased from 27% to 37% and India’s share improved from 3.4% to 4.7%.
When asked to cite the reasons behind the adverse conditions, Saud said that the energy supply mismanagement, comparatively high cost of production and lack of new investments are holding Pakistan back.
Published in The Express Tribune, October 13th, 2015.
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