Pakistan’s textile sector has been struggling to stay afloat as it battles high costs and excessive electricity surcharges and now the All Pakistan Textile Mills Association (APTMA) says the country could stand to lose $4 billion in exports if moves aren’t made to reverse the downward trend.
APTMA chairman S.M. Tanveer said the association has been warning the government of such an ill fate, and his concern for the sector escalated on news that Pakistan’s exports for July declined 17 percent, according to the Express Tribune.
Ten million garment sector workers and their representative associations had scheduled a strike to express their concerns on Aug. 7 but deferred the display of displeasure when the country’s finance minister said he would address the high costs and surcharges by the end of this month.
“The government is finally taking the textile sector into confidence and has promised to remove the bottlenecks in the way of exports,” the Tribune reported Tanveer as saying at a press conference this week. “The federal finance minister and the commerce minister have acknowledged the Aptma’s stance and Haroon Akhtar, Adviser to the PM on Finance, had comprehensive discussions with the association’s leadership.”
Tanveer also said Pakistan’s rupee is overvalued, and that, coupled with what he called an “irrational tax regime” (electricity surcharges alone can run as much as 45 percent more than regional competitors pay) was what killed the country’s competitiveness. A gas infrastructure development tax plus taxation on export-oriented goods added to the burden.
“The government has the option to either devalue the rupee by 12 percent to 15 percent or remove the additional taxes on export industries to make them zero-rated,” Tanveer said, according to the Tribune.