Pakistani Cotton Mills Call on Government to End Export Levy
June 3, 2010 Bloomberg
Khurrum Anis
Cotton mills in Pakistan, the world’s biggest yarn producer, asked the government to end a levy on exports, which they say threatens the closure of hundreds of units because of lost sales.
A ministerial committee will discuss the proposal by mills to abolish the 15 percent regulatory duty in Islamabad tomorrow, said Yaseen Siddique, chairman of the southern region of the All Pakistan Textile Mills Association. The meeting comes after the trade group met Prime Minister Syed Yousuf Raza Gilani and Finance Adviser Abdul Hafeez Shaikh last week.
The tax may undermine the government’s plans to achieve $25 billion of textile exports by 2014. Cotton yarn exports rose 32 percent to $1.2 billion in the 10 months ended April 30, according to the Federal Bureau of Statistics.
Textile exports account for two-thirds of Pakistan’s overseas shipments.
The duty was imposed because cotton futures reached a 25-month high of 87.1 cents on April 26 on ICE Futures U.S. in New York, making it expensive for Pakistan’s apparel and bed linen makers to import yarn. The government has directed textile makers to move toward the manufacturing of clothing and fabrics which will earn more foreign exchange than yarn.
“The duty should stay because this will force yarn manufacturers to sell their stocks locally and not abroad,” said Javed Bilwani, chairman of the Pakistan Apparel Forum.
The government imposed a quota in January on yarn exports limiting overseas sales to 50,000 metric tons a month. In February, the quota was reduced to 35,000 metric tons and then replaced with the duty this month.
There are 465 yarn makers in Pakistan, according to the trade group.
(Story found in original format here.)
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