Chairman All Pakistan Textile Mills Association (APTMA) Mohsin Aziz has said that massive decline in textile exports in the month of October both in value and quantity terms is alarming and this trend is likely to continue in the month of November without redress the issues of energy shortage and high mark up rate for textile industry.
He cited that the IMF latest report has also endorsed the APTMA concerns regarding sluggish economic trends, particularly rising trade deficit amidst dwindling exports. He said the exports may drop further in coming months due to unfavourable circumstances.
According to him, textile exports though increased in value terms during last four months of current fiscal, yet all textile exports declined in quantity terms in October. The exports of cotton yarn, cotton cloth, knitwear, bed wear, towel and readymade garments have registered decline by 26%, 32%, 26%, 28%, 12% and 14% respectively, he added.
Chairman APTMA said short supply of energy was one prime reason behind drop in exports, as the textile industry has been denied gas supply for 120 days during 2011 against much lesser days during previous year.
Further, he said, high interest rate was restricting industry expansion. According to him, a reduction of 150 basis points to produce export surplus has failed in pushing credit off take, which means the interest rate is yet on higher side and both commercial and industrial borrowers are reluctant for further financing.
Chairman APTMA said the interest rate the world over ranges between zero to one percent and the discount/policy rate is not more than 8.5% in the regional economies against Pakistan where it is still in the double digit to 12%. He said the IMF is also of the opinion that improvement in employment and living standards not achievable unless economic reforms take place by ensuring industrial expansion and new set ups with reduction in interest rates.
He said the SBP should reduce the discount rate by 250 basis points in upcoming monetary policy on November 30th to ensure single digit mark up in the country. According to him, curbing the inflation must be priority of the government but still it should not be at the cost of industrial growth, as reduction in discount/policy rate would not affect inflation and instead it would be helpful in creating new jobs.
Chairman APTMA has urged the government to ensure uninterrupted energy supply to the industry forthwith besides reducing mark up to single digit to let the industry expand and perform to contribute in national economy.
All Pakistan Textile Mills Association (APTMA)