20000314

Razak assures

value-added

sector of duty

on yarn exports

SHAHID IQBAL

KARACHI: Commerce Minister Abdul Razak Dawood has assured the value-added sector of imposing export duty on yarn or the yarn export will bring under quota restriction.

This assurance was given to the bedwear exporters who were called Islamabad on Monday to discuss the yarn related crisis.

The exporters of value-added textile products claim that they lost contracts because of high prices of yarn in the local market.

They told the minister that despite low prices in the world market because of surplus cotton production world-wide, the local produces increased the prices of yarn by 40 percent.

"We discussed the problem for two hours and convinced the minister that some restrictions on yarn export is must which he agreed," said Shabbir Ahmed, Chairman Bedwear Exporters Association, who led the delegation of bedwear exporters.

The government is extremely under pressure to put some restrictions on export of yarn particularly to bring down yarn prices in the local market.

However, the yarn exports earn around $1.3 billion to $1.5 billion each year for the country which do not allow the government to take risk specially when the foreign exchange reserves is at the critical stage.

"The minister assured that the government is seriously considering controlling the free export of yarn. We proposed either impose 10 percent duty on export or limit the yarn up to 15,000 tonnes per month," said Shabbir.

The average monthly export of yarn is about 30,000 tonnes, however, it varies from month to month.

The new government has been emphasising to increase value-added products but so far nothing concrete could be done in this regard.

"We demanded of the government to give us more incentive and we, the value-added sector, will increase the export up to $12 billion instead of government's target of $9 billion," said Shabbir.

The exporters asked the minister to provide them export financing at the rate of 3 percent interest instead of current 8 percent.

"The minister was ready to withdraw export financing facility on export of all counts of yarn. We told him that it is useless at this stage as the financing has already been used for the fiscal year," he said.

The meeting remained continued for two hours. Commerce Secretary Mirza Qumar Baig also attended the meeting.