Monday, May 17, 2010

Pakistan spinning sector considering shifting business to Bangladesh

Photo: Pakistan weaving traditional Ajrak, popular among Sindhi communities


LEADING UNITS of spinning sector and exporters of yarn are considering shifting their businesses to Bangladesh. “After last nail in the coffin by imposing 15 percent regulatory duty on yarn exports, the spinning and yarn exporter sector have no choice other than to go to quota free country”, export committee member of Pakistan Yarn Merchants Association (PYMA), Khalid Rafi said on Saturday.

The yarn sector will have to bear an additional tax burden of more than Rs 20 billion after imposition of 15 percent regulatory duty on yarn export, Rafi maintained.

He said around 50,000 tonnes of yarn is going to be surplus with no buyer in the market besides thousands of workers will be rendered jobless.

“Spinning units and exporters of yarn will become importers in Bangladesh and enjoy full benefits of tax free zone besides getting benefits of quota free exports to USA and EU”, a member of PYMA, Shakeel Ahmad said. He said a sizeable garments orders from EU and USA have been moving from China to Bangladesh so Pakistani industrialists moving to Bangladesh have a great opportunity to share a robust growth of textile exports.

“Bangladesh tax free zone in Fareedpur near Chittagong is a lucrative offer to investors as it is meant for only textile sector. Only condition is that 60 percent of the workforce should be Bangladeshi origin”.

Ahmad said the big problem of both the countries was lacking of direct shipping link which was also time consuming, but after shifting businesses to Bangladesh, the spinning and export sector would avail the benefits. He said present trade volume of Bangladesh and Pakistan is around $375 million, which includes $85 million of Bangladesh export of jute and tea and $290 million of export from Pakistan to Bangladesh in textile and fabrics including yarn and cotton.

“Our trade volume will be affected as our yarn and cotton export to Bangladesh will suffer a setback after imposition of 15 percent regulatory duty on exports”, Ahmad asserted.

He said due to high cost of doing business, the Pakistan spinning and yarn industry had already been facing production targets and after regulatory duty on yarn export, our competing edge would become more difficult in the global market.

The government should provide a level playing field to all segments of textile sector otherwise a large number of units were seriously considering shifting and relocating their manufacturing concerns. He said the unfriendly government policies towards this segment of textile sector and the exorbitant rates of gas and electricity had brought about the decline and closure of industry in the country.

Saquib Ali, deputy High Commissioner Bangladesh in his comments said that people of both countries should come together to reach at a real consensus through journalists, students and universities.

The Deputy High Commissioner requested the business community to communicate him the problems and assured for full assistance and cooperation. He said the South Asia could only progress if the free interaction between business community in particular and common people in general continues. “If the two nations support each other, have joint ventures, enhance economic cooperation and boost-up bilateral trade, the relationship between the two countries will be even better, he added.

He said Pakistan and Bangladesh have enough potential and these should be utilised by the business community of both the countries. #

First published in The Daily Times, Pakistan, May 16, 2010

Razi Syed is staffer with The Daily Times and writes from Karachi, Pakistan