Fabric imports from any part of the world should be allowed under legal channel of import: Muhammad Usman

Karachi, April 28, 2016 (PPI-OT):Central Chairman of Pakistan Yarn Merchants Association Muhammad Usman, while giving some suggestions to resolve the conflict over imposition of regulatory duty on polyester filament yarn, advised the government that fabric imports from any part of the world should be allowed under legal channel of import which includes Letter of Credit (LC) or Documents Against Payments (DP) whereas the payments via banking channels can to save the local downstream industry.

He further asked the government to put import of fabric from Dubai on negative list as there no weaving/ knitting factories exist in Dubai while the Indian origin fabric was simply being routed thru Dubai, resulting in causing severe losses to local industries. Seeking government’s attention, Chairman PYMA pointed out that the local manufacturers of Polyester Filament Yarn can only meet the needs of local downstream industry to the extent of about 25 percent whereas the rest of 75 percent requirement is met through imported yarn.

Despite the fact that investigation was currently underway by National Tariff Commission to review Anti-Dumping Duty, Some manufacturers including Gatron and Rupali were lobbying very hard to ensure imposition of regulatory duty, which would result in bringing the weaving and knitting industry on the verge of complete collapse, he said, adding that these attempts by local manufacturers would put the entire weaving and knitting industry in grave situation by increasing the cost of yarn, thus making the entire downstream industry uncompetitive.

Muhammad Usman warned that results would be disastrous for the Exports which are already suffering on account of high energy costs. He said that few local manufacturers were attempting to monopolize in order to gain short term benefits at the expense of huge large downstream sector which employs millions of people and is the back bone of economy.

He further pointed out that an anti-dumping duty of 18 percent was imposed on imported filament yarn from Thailand, Malaysia, Korea and Indonesia in 2005 and at that point in time, a total of 17 local yarn manufacturers were operating whereas this raw material was not being imported from China. Despite improving the situation, this measure proved to be counterproductive as during the last over 8 years since the imposition of Anti-Dumping duty, the number of local manufacturers has reduced to just four units while the market share has also drastically descended, he added.

He suggested that the long term solution for dealing with this serious issues was to modernize and upgrade plants of local manufacturers, besides enhancing their capacity to achieve economies of scale whereas the imposition of Regulatory Duty was not the right solution. Muhammad Usman stated that National Tariff Commission was the right forum to address the issues of dumping. Regulatory duties may temporarily resolve the issue but such actions usually cause distortions and create bigger problems in the long run.

Chairman PYMA further stated that textile package was envisioned by the Government of Pakistan in 2005 in which all stakeholders agreed that in order to bring fabric trade under legal umbrella, the maximum duty on fabric should not exceed 15 percent. Hence, the duty on yarn was fixed at 7 percent but over the years, the duty on yarn has escalated to 11 percent, causing distortions and making raw material for the downstream industry more expensive. “We suggest that yarn duty should be rolled back to 9 percent to give benefits to weaving and knitting industry”, he added.

For more information, contact:
Pakistan Yarn Merchants Association
S.M Saeed Qadri
Secretary – P.Y.M.A
Ph: (+9221) 2410320
Fax: (+9221) 2424896
Business Centre, 8th Floor, Dunolly Road,
Karachi -74000
Email: pyma@cyber.net.pk