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Textile Sector

* * * - - 1 votes Textile Sector Textile

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#1
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    Release of stuck up Indian lint allowed
    AFTAB MAKEN
    ISLAMABAD (December 10 2006): On the persuasion of Ministry of Commerce, the Ministry of Food, Agriculture and Livestock (Minfal) has allowed release of seized 2971 cotton bales, imported from India some six weeks ago, as a special one-time case.

    Despite opposition from Plant Protection Department, the Minfal has permitted release of four importers' consignments, as a special one-time case, an official in Minfal told Business Recorder on Saturday.

    Din Textile Mills, Suraj Textile Mills, Nishat Chunian Textile, and Amin Textile Mills had imported 2971 bales cotton lint from India through Wahga border about 40 days back, but Plant Quarantine Dept, Lahore, seized the consignments being without NOC from the concerned department.

    All four importers, through Ministry of Commerce, sought one-time permission for release of the imported cotton lint from India, but the attached departments of Minfal seized the consignments, as it is not allowed to import cotton lint through any route other than sea. They said that demurrage charges were increasing the cost of the commodity, which would eventually increase the cost of value-added products.

    "The ministry cannot allow import of cotton lint from countries like India and Central Asian States through land route, as the quarantine stations other than Karachi are not fully equipped for treating the imported lint, like fumigation", the official said.

    The Minfal suggested to the concerned ministries not only to review the quarantine rules at the respective entry points but also avoid such practice in the future, the officials added. "Yes, the Minfal has no objection on importing cotton lint from anywhere but only through sea routes", said Minfal Secretary Ismail Qureshi.

    The Federal Committee on Agriculture (FCA) has estimated 12.4 million bales against the cotton production target of 13.8 million bales for 2006-07 while Cotton Assessment Committee in its last meeting on November 20 had repeated the first estimate.

    The millers are expecting shortage of 1.5 million bales during the current season if Minfal's estimate does not meet the target. Hence, they are pursuing textile and commerce ministries for allowing import of lint particularly from India.

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    All Pakistan Textile Mills Association (APTMA)
    http://www.aptma.org.pk/

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    FDI factor starts tantalising textile sector

    By Hamid Waleed

    LAHORE: The lure of foreign direct investment (FDI) has started tantalizing the textile circles and they feel that the textile sector’s jumbo size now looks very small because of heavy investments made by telecom giants alone recently.

    Textile millers say the textile sector has invested nearly $5 billion in the past five years under the Balancing, Modernization and Rehabilitation (BMR) programme, but Mobilink ($4 billion) and Warid ($2 billion) alone have invested $6 billion in a short span of time. They also refer to the proposed investment of $43 billion by the Emmar Group on two islands off the Karachi coast and another $1 billion by Engro Chemicals in near future.

    “Such an impressive inflow of foreign investment in the country has probably devalued the textile sector in the eyes of policymakers,” said one textile miller.

    Others in the textile sector, however, look at the situation in another way. According to them, the industry is facing a crisis of leadership, providing an opportunity to the policymakers to twist the textile sector’s arm at their will.

    They are of the view that the chairman of the All Pakistan Textile Mills Association (APTMA) is not vocal on textile sector’s issues. They claim the former APTMA chairman had a similar attitude, saying: “The practice of back channel negotiations with policymakers has diluted the industry’s position in general.”

    They also blamed the industry elders for sidelining small textile millers.

    Nevertheless, they said, the textile industry was still contributing largely towards the economic growth of Pakistan. Its share in the total exports of the country was 63 percent, in manufacturing 46 percent, in employment 38 percent, and 11 percent in the gross domestic product. Around Rs eight billion investment had been made during the last five years. But government policies were pushing this important sector to the wall and it could collapse at anytime, they said.

    According to these circles, the input costs are at all time high and volatile, there had been favourable stability in cotton prices during the last three years, but the changing prices of polyester remained unstable for the past many years, which left negative effect on the financial results of the spinning sector. The government is continually increasing prices of other inputs: the cost of electric power is 6.9 cents per kilowatt, which is nearly more double when compared with the rate in our competitive countries. The price of gas is $4.42 per MMBTU and in Bangladesh it is $1.83 per MMBTU. Regardless of the decline in international prices of oil, WAPDA is said to be increasing its prices. The government has revised the minimum wage twice in recent years from Rs 2,500 to Rs 4,000.

    There is no duty drawback for exporting units on use of water, power, telephone, C&F, and insurance, but it is available in Bangladesh, China and India. Our industry is subject to various additional duties and taxes such as EOBI, social security, professional tax, duty and surcharge on utilities, cross subsidy and stamp duty. The levy of custom duty at the rate of five percent on the import of machinery and 5-25 percent on stores and spares does not only discourage the BMR of machinery, but also make the cost of stores and spares high. The levy of income tax on export proceeds from 0.75 to 1.5 percent whereas in Bangladesh this rate is quite low at 0.25 percent of total export proceeds. Then there is the exorbitant increase in interest rate, there are procedural difficulties in raising finance from banks, difficult and lengthy procedures of CBR taxation system, blockage of huge amounts in the name of input sales taxes and advance income taxes in government treasury, delayed refunds, lack of professionalism in policy and procedure-making departments, all are contributing to put the textile sector in difficulty.

    Due to all these factors, they said, Pakistani exporters are losing their market share in Europe even with the lower price than exporters from China, India and Bangladesh. They were of the view that the ministries of commerce and industry were of no help in the resolution of the issues. “The Trade Development Authority does not realize that once a buyer is lost to other country, he is not likely to return to Pakistan, and once a mill is closed, how difficult it would be to restart it.

    They urged the government to take immediate steps to save the textile sector.
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    Cotton prices continue to move up

    KARACHI: Cotton prices continued to move upward during last week.

    Textile spinning mills expressed concern over rising contamination level in lint cotton which was deteriorating quality of yarn and fabric badly, however despite this spinning mills made fresh deals in order to build their inventories.

    Lint cotton was traded between Rs2,425 to Rs2,625 per maund as it cotton changed hands at Rs2,500 to Rs2,600 per maund in Punjab and Rs2,425 to Rs2,625 per maund in Sindh whereas prime quality seed cotton (Phutti) was being priced at Rs1,300 to Rs1,350 per 40 kg in Punjab as well as in Sindh.

    Spot Rates Committee of Karachi Cotton Association (KCA) increased the spot rates for base grade-III by Rs25 to Rs2,550 per maund at end of the last trading session.

    Moreover according to sources of All Pakistan Textile Mills Association (APTMA) the prices and demand of textile products besides of cotton yarn was moving down at domestic as well as in international market against rising trend in cotton prices.

    Sources said that unused cotton stocks of mills were getting high, while they were also facing financial crunch.

    On the other hand ginners have piled up cotton and other by products like Banola or cottonseed cakes, which has pushed up the prices of lint and by products to unjustified level.

    In addition Trading Corporation of Pakistan (TCP) invited tender for sale of some 1,3464 cotton bales from its old stocks during the week under review which would be opened on December 26, 2006.

    Textile mills are importing cotton due to continued price hike in domestic market.

    According to market sources spinning mills had made import contracts for more then 1.5 million cotton bales so far, whereas further contracts are in pipeline.

    Country may have to import more than 2.5 million bales in order to bridge domestic consumption of local textile mills due to short production of cotton crop this year.

    During the week it was announced that National Commodity Exchange (NEC) might start functioning by February 2, 2007. Some leading brokers demanded government to start cotton trade at NCE without further delay.

    In addition a bullish trend was witnessed at New York cotton market during the week.

    Moreover an organized gang of dacoits have allegedly deprived many cotton ginners from huge quantity of cotton by stealing trucks loaded with cotton from different ginning factories as was reported by different ginning factories particularly from different areas of Sindh. During last few days more than 800 cotton bales were reportedly looted from different ginning mills including Anmol Ginning factory of Tando Adam.
    ==============================================================================

    Pakistan : Textile exporters refund claim to be settled
    December 14, 2006

    While addressing a meeting of Pakistan Hosiery Manufacturers Association (PHMA), member sales tax, CBR Musarrat Jabeen assured settlement of refund claims of the exporters of knitwear, hosiery and textiles by December 2006 and January 2007.

    Exporters faced many difficulties and problem of liquidity due to some technical issues.

    An advisory committee with a representative of each association will be constituted and monthly meeting will be called by sales tax collectorate.

    Many industries are already shutting down due to tough competition from global markets. Even large numbers of claims are pending to be entered into computers.
    =============================================================================
    Introducing international production practices
    Study on spinning, weaving completed

    By Imran Ayub

    KARACHI: An international consultancy, hired by the federal government, has completed benchmarking of two major segments of textile industry in a major move to standardise production and mode of operations.

    A senior official said that Werner International, which was assigned the $200,000 project a couple of months ago, had informed the authorities concerned it had concluded benchmarking of spinning and weaving segments of the industry.

    “Now we expect study and benchmarking of other eight categories of the industry by the start of January 2007,” said Syed Masood Alam Rizvi, Federal Textile Secretary.

    “Actually, Werner was hired for benchmarking of 10 different textile categories including weaving, spinning, dying, labour, etc and is expected to complete the task within the first quarter of 2007.”

    He said the project was part of the government’s plan to bring standardisation and international production practices followed by leading textile manufacturers, which could attract world attention to Pakistani products and enhance exports.

    “After benchmarking of 10 different textile segments, which are actually involved in production process, we have also plans to bring in the same strategy for our products,” said Rizvi.

    The latest data released by the Federal Bureau of Statistics reports that country’s textile exports declined by 9.11 per cent, to less than $3.23 billion, during the first four months of this fiscal. Over the same period last year the figure was more than $3.55 billion. Fresh moves, the authorities believe, may help the industry face challenges.

    Rizvi said that Werner International was carrying out SWOT (Strength, Weakness, Opportunities and Threat) analysis of Pakistanís textile sector.

    “For study purposes, textile sector has been divided into 10 categories and each sector association is asked to refer some eight units for the analysis, which makes a total of 80 units to be surveyed and studied by Werner International for benchmarking,” he added.

    Millers appreciate the government effort of benchmarking but suggest it is not the only way to compete the existing approaching challenges.

    “Obviously, it would produce results for both industry and the government,” said one of the readymade garments exporters.

    “But it is not the only solution to bring in the competitiveness. The government must also pay attention towards the higher cost of doing business in Pakistan and compare it with other part of the world.”

    Downfall in textile exports has already alarmed the authorities concerned pushing the Prime Minister Shaukat Aziz to constitute National Textile Strategy Committee for proposals by December 31, 2006 to come up with a strategy to make the industry more competitive and sustainable.

    There is a strong feeling, among both industry players and government officials, that if the new approach fails to attract local industry, Pakistan may witness desperate moves from the industry.

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    Pakistan - Cotton prices stand firm despite larger crop

    Cotton harvesting is now heading toward end with estimated arrivals of seed-cotton equivalent of some 10.2 - 10.3 million local weight bales by 15th December, 06 against 10.2 million bales received same time last year. As such, we are likely to achieve production somewhat close to 13.0 million bales this season.

    However, PCGA's cotton arrival report for the first fortnight of this month is much awaited. At the end of November, 06 total arrival was put at 8.978 million bales. Although, cotton production targets would be achieved prices are maintaining firm tone on reports of scarcity of better quality cotton.

    Taking advantage of price viability, the spinners have booked some 1.6 - 1.8 million bales of cotton. Recently, lot of Indian cotton was booked to cover their requirements.

    The exporters are required to register all their export sales with Export Promotion Bureau now Trade Development Authority of Pakistan but contracts for import of raw cotton are not registered with any agency, which gives rise to speculation in imports of cotton.

    The government should ask the importers of raw cotton to register their contracts with the Trade Development Authority of Pakistan so as to have idea about the amount of imports and exports. Local Spinners prefer to pick each and every lot of fine quality around Rs 2,600/ maund ex-gin. In view of slackness in yarn market, spinners do not appear to pay more than Rs 2,600 for better quality cotton whereas discounting lower grade cotton.

    Domestic mills cotton consumption is estimated around 15.5 million local weight bales. The textile trade and the Government of Pakistan are equally worried about shortfall in textile exports last month. The All Pakistan Textile Mills Association - the apex body of spinning sector is stressing upon the government to allow some concessions in taxes and interest rates etc to make them competitive in textile exports so as to achieve export targets.

    This season, the government has fixed export target of $18.2 billions and import target of $31 billions. The version of the local textile mills is that in Pakistan cost of production of textile goods is higher than other countries like, China, India and Bangladesh. Pakistan's textile exports in the first three months of the FY (July 06 - Sep 06) dropped by 10.33 percent. Last year, out external trade deficit was $12 billions, which may swallow to $15 billions this season.

    While comparing some factors of production with those in Bangladesh, our Textile mills say that in Pakistan labour wages are higher by 71.24 percent, Power 102.94 percent, Water 56.67 percent, Steam 38.46 percent and Gas 141 percent. Beside, substantial increase in rates of LIBOR (4.32 percent to 10.5 percent +2 percent), Inflation (3.10 to 8.0 percent), Exchange Rate (US $ to Pak Rupee Rs59.46 to 60.50), POL prices around 37 percent in one year are adding to production cost.

    The textile industry claims to have invested some $5.5 billions in the industry since the year 2001 under the heads of addition, balancing, modernisation and replacements to meet the challenge of free-trade from 2005. The government is reported to have taken some decisions in this regard and by the end of this month, the government is likely to make some announcement.

    Previously also, the government bailed out textile industry many times by allowing special concessions and rebate but the Textile Industry did not come up with the desired results. This expected positive package for the textile sector may help in boosting textile exports in the second half of this financial year. In sympathy with viability in textile exports, lint prices may also improve somewhat.

    Pakistan should take revolutionary methods to increase its cotton production at least to the level of our domestic requirements around 15.50 million 170-Kg bales in the first phase and then to the level of 20.0 million 170-Kg bales in the second phase to create surplus for exports. For this, we have to introduce GM (Genetically Modified) technology in seed-breading, latest methods of irrigation, improvement in quality of inputs such as seed, fertiliser and pesticides and adoption of latest agronomy practices.

    Our agriculture sector, which is working on 50 years old system require to be overhauled to meet the challenges of the present times. Also, growing of organic cotton should be introduced in Pakistan specially in Balochistan area as organic cotton fetches double the price of regular upland cotton.

    This season, India is expecting production of some 50,000 bales of organic cotton. Agriculture being backbone of our country should be provided all necessary help and assistance in boosting yield and getting them international prices of their proceed.

    In the local market, lint cotton prices remained steady to firm. Ginners have better holding power and are reluctant to sell their lint cotton at lower rates while buyers-spinners are adamant in paying higher prices. As a matter of fact cotton market is locked around Rs 2,600 for better quality. Average and below average grade cotton is selling between 2,400 and 2,550 per maund ex-gin. Last week, the Trading Corporation of Pakistan (TCP) had floated a tender for selling some 13,000 bales of different grade and staple lengths.

    This sale offer is for cotton bales without mentioning Lot Nos as the bales are from mixed and damaged lots. However, some of the exporters, who are maintaining short position and are finding the present price level quite unworkable would try to win the tenders. Best bids may be between Rs2,300 and 2,450 per maund depending on quality. Spinning mills may not show much interest in this two-year old cotton.

    On the international front, level of prices has moved upward on the strength of substantial increase of US Cents 6 /lb in New York prices in a fortnight. US is reportedly lacking in its seasonal export sales, which are around 5.4 million bales against about over 9.0 million bales same time last year. India is quite aggressive in selling its cotton abroad and has achieved most of the target in export sales.

    Pakistan and India have this week signed an agreement in New Delhi for operating cargo shipping services between the two countries directly. This would reduce the shipment time and also shipment cost. India is year to year increasing cultivation of Bt Cotton varieties. India has increased sowing of Bt Cotton varieties phenomenally from a few thousand acres in 2002 to 3.25 million acres in 2005. Indian domestic cotton consumption is increasing by 6 percent annually and by the year 2010, India cotton consumption would touch the level of 35.0 million 170-Kg bales.

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    Textile ministry revises its goals, target

    ISLAMABAD: Ministry of Textile and Industry underscored the need for sectoral approach linking productivity with efficiency, cost effectiveness and cost competitiveness.

    This was decided in the meeting of the Textile and Industry to review the progress with respect to problems in Textile Sector here on Wednesday.

    Minister for Textile Industry, Mushtaq Ali Cheema chaired the meeting.

    The meeting stressed upon the to increase efficiency and cost effectiveness and to provide the requisite support to textile sector without compromising its inherent strength, which had withstood the test of time and fluctuations in the international environment, he said.

    The meeting also reviewed a presentation by Udo Hartmann of Gherzi International Switzerland, a leading textile consultant regarding the various cost and efficiency parameters in textile sector.

    An in-depth analysis of International trading regime factor prices and productivity parameters took place in context of post-quota era and long-term prospects and problems of textile sector.

    A sector by sector analysis including ginning, weaving, spinning and garment sectors took place, focusing on strengths and weaknesses with a view to evolve a long term strategy within the existing macroeconomic, financial and institutional framework as well as international competitiveness scenario.

    The prevalence of escalating cost pressure on one hand and wide range of subsidies and support in competitor countries of the region, which offset balance and has eroded the level playing field in textile sector were also noted in the meeting.

    Humayun Akhtar Khan Federal Minister for Commerce, Akram Sheikh Deputy Chairman Planning Commission, Tariq Ikram Chief Executive Officer Trade Development Authority of Pakistan, Secretaries of Ministries of Textile Industry and Commerce, as well as other high-ranking officials attended the meeting.

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    Pakistan's export of textile products up 26.9 per cent to $864.93million
    FROM A CORRESPONDENT

    24 December 2006


    ISLAMABAD — Pakistan's export of textile products has risen by 26.9 per cent to $864.935 million during the month of November 2006 as against $681.570 million over the same month last year.

    Official figures released yesterday showed that export of almost all textile products excluding cotton cloth and cotton carded recorded positive growth during the month under review over the same month of last year. The sudden upward trend in the export of the textile products in November 2006 after the negative growths in the successive previous months of the current fiscal year was the result of the cash subsidies announced by the government during the last months, which helped the exporters in marketing their produce at lesser prices with those of Indian and Chinese products. Commerce minister Humayun Akhtar Khan in a recently held Press conference admitted that in case these subsidies were not doled out to the textile sector particularly the garment sector, Pakistani textile products would record massive decline.

    An analyst said that Pakistani manufacturers, however, were not focusing on improving the quality of their products, timely delivery etc despite the fact that their products were cheaper from Chinese and Indian products. The product-wise details of textile commodities showed that the export of readymade garments increased 9.72 per cent during the month of November 2006 of the current fiscal, over last year. Exports of raw cotton and cotton yarn have increased by 5.19 per cent and 9.48 per cent, respectively. However, the export of cotton cloth and cotton carded declined by 3.57 per cent and 81.09 per cent during the month under review over last year.
    Knitwear, bedwear and towels exports up by 34.96 per cent, 23.34 per cent and 32.12 per cent, respectively, during the month of November 2006, over the corresponding month last year. The export of made-up articles, including other textiles, increased by 26.34 per cent, art, silk and synthetic textile by 548.75 per cent, and other textile materials by 67.81 per cent during November 2006, over the same month last year. The export of tents also increased by 100 per cent during the month under review over the same month of the last year. The statistics however showed that export of total textile products declined by 1.12 per cent to $4.192 billion during the July-November of the fiscal year 2006 as against $4.239 billion.

    chalo meray bhai textile sector mein exposure lo lao nml lao ncl.

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