950806

Counter to anti-dumping levy

MCCI urges govt to

restrict imports

from Japan, Taiwan

RECORDER REPORT

KARACHI: President of Multan Chamber of Commerce and Industry (MCCI), Khawaja Muhammad Abdullah demanded of the government to establish a separate federal textile ministry to implement its 'Textile Relief Package' announced in November last, in true letter and spirit.

In a letter to the prime minister Sunday, he also urged the government to reduce mark-up rates of the banks to a maximum of 10 percent for textile industry, and also ban cotton exports till the size of 1995-96 cotton crop was determined, so the ailing textile industry survives the crisis period.

He also asked the prime minister to personally take up the matter anti-dumping duties imposed by Japan and Taiwan, enjoying favourable balance of trade. He also demanded abolition of turnover tax.

President MCCI suggested that implementation of "no-duty no-drawback" regime would eradicate corruption and blockade of working capital of the industry, while withdrawal of increase in electricity rates would help in bringing the price of our textile products to a competitive level. He also demanded that import of machinery and spare parts for textile industry should be made duty-free.

In a cable to Prime Minister Benazir Bhutto, Khawaja Abdullah said:

"The situation is heading towards total collapse of the textile spinning industry in the country as textile constitutes about 60 percent of total economy and all other economies are dependent on cotton economy in one way or the other."

The message said: "Bad luck of the textile industry actually had started since 1988 while the export duty and excise duty on cotton yarn were enhanced to Rs 6 per kg from Rs 3 per kg. The prices in foreign market had though fallen to US dollars 330 from US dollars 475 per 400 lbs of 20/1 cotton yarn and the case, therefore, was of complete withdrawal of export duty and excise duty. The increase while proved fatal to domestic industry, our competitors particularly India, China etc. availed the opportunity of our unwise decision who got benefited and our hard earned traditional markets were captured by them.

"The President of Pakistan Sardar Farooq Ahmad Khan Leghari, during his tenure as federal finance minister of interim government realized the gravity of circumstances and substantially decreased the excise duty and totally abolished export duty. The industry had then taken some sigh of relief," he added.

"Last year and in current cotton season some imbalances were created by the government functionaries which increased prices of 'Kapas' up to Rs 1,000/1,200 per maund and of cotton lint up to Rs 2,400/2,600. The domestic spinning industry was forced to purchase cotton, from October, 1994 to March, 1995, at average 15 percent higher price than international price. Creators of such imbalances in cotton prices have not cared to appreciate that if the substantial buyers/consumers of cotton in the country are made to suffer so heavy losses, it can never prove useful for the cotton growers and cotton economy as a whole.

"Your honour may kindly appreciate that the checks and balances of the prices of international commodities is the responsibility of the government who is supposed to maintain equilibrium in prices for all concerned.

"Kindly take notice of the government functionaries who have gone to the extent of calling Aptma 'A Mafia'. While the bare fact is that the spinning units of 12,500 spindles each are making very heavy losses. Your honour may kindly pursue the six monthly statements of the textile units particularly of people belonging to your own party which will speak the truth about the dying textile industry.

LINT PRICES

"The textile industry has always been accused of availing edge as regards the cotton lint price. It does not bear any truth as the lower prices of cotton compared to higher international prices used to be hardly enough to offset the higher cost of inputs, electricity and mark-up rates etc. If in some years there was good profit, the government used to levy export duty, so no edge was ever availed by domestic textile industry. The local textile industry can be happily ready to purchase cotton at international prices provided they get all their inputs, electricity, mark-up, machinery, spare parts etc, also at international prices.

"Of course, the growers should definitely prosper because they spread the blessings in the country. Our agriculture is our culture. The fate of our country depends on peasants. We had yielded cotton production of 13 million bales. The solution lies in producing virus-resistant seeds and have larger yields per acre. The average production of 30 maund per acre can bring more prosperity to grower even at Rs 600 per maund than Rs 1,200 per maund if production is only 10 maund per acre. The scientists/researchers, therefore, be instructed to produce seeds resistant of diseases."

Abdullah said that if the fast deteriorating circumstances are not arrested there was no doubt that the whole textile machinery worth billions and billions of rupees would become a junk. "Then, who will purchase our cotton, who will consume so costly electricity and who will pay so exorbitant rates of mark-up? The result will be total collapse of industrial activities in the country."

DEMANDS

He asked to stop lowering of tariffs on imported commodities which are bound to affect domestic industry very badly. "We are now importing Danish cakes also, which is not a good sign for a nation who has to work still harder for its very survival."

He reiterated the demands to

- establish a separate textile ministry at federal government level,

- implement textile relief package decided by the ECC in its meeting on November 21, 1994, in its true letter and spirit,

- allow a very nominal rate of mark-up till the industry comes out of woods. The maximum mark-up rate be fixed at 10 percent as textile is agro-based industry.

- cotton should not be allowed to be exported until the actual crop size is fully known and the exportable surplus is determined after providing for an appropriate size of its buffer stock.

- to abolish half percent turnover tax under section 80-D on industries in tax holiday areas during respective exempted periods, and

- to avoid expensive means of energy production and instead to start immediate construction of Kala Bagh Dam Project which will produce electricity drastically cheaper.

He said: "Kindly advise your advisers/experts to sit and ponder together for the revival and smooth running of the industry before it is too late and may become irreparable.

HEDGE TRADING

"It is reported that the federal government is allowing opening of hedge in cotton trading. Kindly examine the issue thoroughly, keeping in view its old history, before final decision.

"Anti-dumping duty matter be kindly taken up at your kind personal level. The balance of trade is already in favour of Japan and Taiwan. If they do not agree, our government should also restrict imports from these countries.

"No-duty no-drawback regime be ordered immediately. It will eradicate corruption, besides saving the industry from cumbersome procedure.

"Order the withdrawal of recent increase in electricity rates immediately.

" Allow free of any levies the import of machinery and spare parts under BMR to the whole textile and allied industries for their revival."