In view of the inherent capacity of the textile industry to bring about meaningful improvement to the economy, it is important to see that this capacity is not compromised, APTMA spokesman said.
The spokesman was of the view that keeping into consideration the inherent capacity of the textile industry to bring about meaningful improvement to the economy, the government must act to prevent compromise of this capacity and provide breathing space to the industry to overcome liquidity problems, relax prudential regulations, restructure outstanding bank loans, reduce interest rates for raw material procurement and incentives mergers and acquisitions to enable realisation of economies of scale.
Currently, 90 percent of the operating textile industry is incurring cash losses and facing closure as more than two months’ production has been lost due to non-availability of electricity and gas.
APTMA, a premier textile industry Association established for the promotion and protection of the textile industry, is today most unfortunately considering closures. Towards this end it has called an EOGM to formalise an industry-wide mills’ closure strategy.
The spokesman agitated that the principal factor that has operated to offset the laudable gains secured by the industry in such adverse circumstances is the high cost of finance on account of the strident rise in interest rate and the inordinately high bank spread.
Since 2004 interest rates shot up dramatically. Kibor has surged 261 percent. Likewise, the bank spread, on a weighted average basis, rose from an understandable 2 percent to an unreasonable 7.75 percent. This magnitude of bank spread is among the highest in the world and it is evident that such a high bank spread could be realised only with skewed effect to other sectors. These high rates were afforded to the banking sector as a result of conscious policy to the detriment of the manufacturing sector.
The spokesman claimed that the repercussions of a set-back to the manufacturing sector particularly the textile have been varied and diverse. At stake are more than 3 million direct jobs and all chances of 15 million family members to be subjected to suffering. Further, the ramifications of the regressive affects of high financial cost that has impeded the progress of the textile industry extend to the agricultural sector as a result of the highly compromised capacity of the principal cotton purchaser that the textile industry is, to lift and utilise cotton, the principal cash crop. The high financial cost to the textile industry has therefore brought insidious results to the whole economy with negative effects on employment, exports, agriculture all of which are intertwined and integrated in the economic mesh of the nation. There is sufficient indication that something is terribly wrong with our policy hitherto, he caviled.
He said that the textile industry of Pakistan is almost exclusively export-oriented unlike those of regional competitors that export an exportable surplus. Having to compete in the international textile market, where the competition is cut-throat and operating margins minimal, the textile industry has always been mindful of the need to remain internationally competitive.
The spokesman said that the competitiveness of the textile industry has been a subject of research and analyses for which different studies have been conducted that include The Way Forward that was done under the critical supervision of the Tariq Saigol Committee, a study entitled The Girzi Report and The APTMA Study on Textile Industry Competitiveness. The textile industry has since July 2007 kept the government updated on its competitiveness, claimed the spokesman.
It has therefore been a matter of trepidation for the textile industry to undergo decline in its financial and operating performance. Exports alone declined up to 20 percent in quantitative terms. The industry had been gearing up to overcome heavy odds that included non-availability of electricity and gas, international market access impediments, unfavourable international marketing environment including not-too-complimentary travel advisories. It had been striving hard to maintain the viability of operations and to continue to contribute to the economy in general and to foreign exchange receipts in particular. The spokesman disclosed that the decline in the textile industry’s performance results, in these circumstances, has been very unsettling for the industry.
The spokesman was of the view that keeping into consideration the inherent capacity of the textile industry to bring about meaningful improvement to the economy, the government must act to prevent compromise of this capacity and provide breathing space to the industry to overcome liquidity problems, relax prudential regulations, restructure outstanding bank loans, reduce interest rates for raw material procurement and incentives mergers and acquisitions to enable realisation of economies of scale.
Currently, 90 percent of the operating textile industry is incurring cash losses and facing closure as more than two months’ production has been lost due to non-availability of electricity and gas.
APTMA, a premier textile industry Association established for the promotion and protection of the textile industry, is today most unfortunately considering closures. Towards this end it has called an EOGM to formalise an industry-wide mills’ closure strategy.
The spokesman agitated that the principal factor that has operated to offset the laudable gains secured by the industry in such adverse circumstances is the high cost of finance on account of the strident rise in interest rate and the inordinately high bank spread.
Since 2004 interest rates shot up dramatically. Kibor has surged 261 percent. Likewise, the bank spread, on a weighted average basis, rose from an understandable 2 percent to an unreasonable 7.75 percent. This magnitude of bank spread is among the highest in the world and it is evident that such a high bank spread could be realised only with skewed effect to other sectors. These high rates were afforded to the banking sector as a result of conscious policy to the detriment of the manufacturing sector.
The spokesman claimed that the repercussions of a set-back to the manufacturing sector particularly the textile have been varied and diverse. At stake are more than 3 million direct jobs and all chances of 15 million family members to be subjected to suffering. Further, the ramifications of the regressive affects of high financial cost that has impeded the progress of the textile industry extend to the agricultural sector as a result of the highly compromised capacity of the principal cotton purchaser that the textile industry is, to lift and utilise cotton, the principal cash crop. The high financial cost to the textile industry has therefore brought insidious results to the whole economy with negative effects on employment, exports, agriculture all of which are intertwined and integrated in the economic mesh of the nation. There is sufficient indication that something is terribly wrong with our policy hitherto, he caviled.
He said that the textile industry of Pakistan is almost exclusively export-oriented unlike those of regional competitors that export an exportable surplus. Having to compete in the international textile market, where the competition is cut-throat and operating margins minimal, the textile industry has always been mindful of the need to remain internationally competitive.
The spokesman said that the competitiveness of the textile industry has been a subject of research and analyses for which different studies have been conducted that include The Way Forward that was done under the critical supervision of the Tariq Saigol Committee, a study entitled The Girzi Report and The APTMA Study on Textile Industry Competitiveness. The textile industry has since July 2007 kept the government updated on its competitiveness, claimed the spokesman.
It has therefore been a matter of trepidation for the textile industry to undergo decline in its financial and operating performance. Exports alone declined up to 20 percent in quantitative terms. The industry had been gearing up to overcome heavy odds that included non-availability of electricity and gas, international market access impediments, unfavourable international marketing environment including not-too-complimentary travel advisories. It had been striving hard to maintain the viability of operations and to continue to contribute to the economy in general and to foreign exchange receipts in particular. The spokesman disclosed that the decline in the textile industry’s performance results, in these circumstances, has been very unsettling for the industry.
