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Poor textile sector output main cause of low exports

KARACHI (April 01 2008): The State Bank of Pakistan (SBP) said on Monday that poor performance of the textile sector was mainly a reflection of sharp slowdown in its exports. In its second quarterly report, the SBP said that the country's overall exports went up by 7.9 percent to $11.7 billion, while imports grew by 22 percent during July-February FY08 mainly due to the rising international commodity prices coupled with domestic supply constraints of some key commodities.

As a result, the trade deficit recorded a sharp $3.5 billion rise to $12.5 billion YoY increase during the period. With this expansion, the ratio of trade deficit to GDP worsened from 6.2 percent in July-February FY07 to 7.9 percent in July-February FY08, the report added.

Ironically, the deceleration in textile exports was despite the substantially high subsidised financing for working capital, fixed investment, and concessional export finance in recent years, and appeared to be driven by structural impediments in the industry as well as recent slowdown in US demand for textiles, the SBP said.

"Besides this, supply and operational bottlenecks like decline in fiscal year 2008 cotton harvest, electricity & gas shortages and deteriorating law and order situation in the country, further worsened the textile sector's weak performance during the period", the report said.

The SBP said that poor cotton harvest and the resultant growth in cotton prices appeared to be the most critical factor in deteriorating competitiveness of domestic textile.

The composition of export growth, on the other hand, represented a structural shift. The growth in exports during July-January FY08 was on account of a rise in non-textile exports--mainly other manufactures and petroleum group--whereas textile exports recorded 3.4 percent year on year fall during this period.

The decline in the textile exports was broad based with only the exports of synthetic textiles, readymade garments and textile made-ups registering growth.

Fall in the textile exports was attributed to both supply and demand factors. On the supply side, textile exports were adversely affected by the rising cost of production due to increase in domestic cotton prices and tariff rates, as well as by the frequent power shortages and political unrest. On the demand side, textile and apparel product exports appeared to have suffered from the slowdown in the US economy.

However, the SBP projected that textile exports were expected to recover when political environment in the country improves and importers become confident with regard to timely fulfilment of export orders.

Having said this, the recovery may not be sharp due to acute power shortages and rising domestic cost of production. The overall export growth was nevertheless likely to pick up on the back of rising non-textile exports, the SBP added.

Business Recorder [Pakistan's First Financial Daily]
 
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Rs 54 billion written-off loans: SBP submits details to Supreme Court

LAHORE (April 01 2008): The State Bank of Pakistan on Monday provided details of Rs 54 billion written-off loans to the Supreme Court of Pakistan. The apex court had directed the SBP to submit details of all those persons/concerns whose loans were written off by the outing government.

In Islamabad, a three-member bench of the Supreme Court, comprising Justice Mohammad Nawaz Abbassi, Justice Hamid Farooq and Justice Mohammad Farrukh Mehmood, held further hearing of the case of written-off loans of which it had taken suo moto notice.

During the hearing, Justice Abbasi observed it was strange that poor defaulters of the House Building Finance Corporation (HBFC) or small business loans were put behind the bar, whereas no action was taken against the rich people to recover the state money.

Attorney General Malik Mohammad Qayyum agreed with the court either loans of all people irrespective their status be written off, or no one should be spared. The court appointed prominent lawyers, Abdul Hafeez Pirzada and S.M. Zafar, as amicus curaie, and issued notice to the Attorney General for April 10.

Business Recorder [Pakistan's First Financial Daily]
 
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Swelling of current account deficit

EDITORIAL (April 01 2008): The performance of external sector of the economy continues to deteriorate. According to the latest figures released by the State Bank of Pakistan, current account balance of the country, which is a real barometer of the position of the foreign sector, registered a record deficit of $8.4 billion during the first eight months (July-February, 2008) of the current fiscal year, depicting a huge increase of almost 44 percent over the deficit of $5.86 billion recorded in the same period of last year.

Such a large gap in the current receipts and payments of the country was caused mainly by the imbalance in merchandise trade which touched the level of $9.09 billion, with exports of only $12.63 billion as against the imports of $21.72 billion. Services sector and income deficits also rose to $4.22 billion and $2.4 billion respectively. Total foreign investment, which had cushioned the external imbalance in the previous year to a large extent, also dropped significantly during July-February, 2008. Workers' remittances increased substantially but these were not enough to check the deteriorating trend in the current account.

The severity of the problem could be gauged from the fact that the current account deficit has not only reached the highest-ever level in the country's history but has already exceeded the full year's projection of $8.11 billion or 4.8 percent of GDP and if the present trend continues, it could amount to nearly $12 billion during 2007-08 as against last year's record deficit of $7.0 billion.

By all indications, the situation in the external sector is alarming. It was unfortunate that neither the Shaukat Aziz government nor the caretaker regime paid any heed to the widening of current account deficit and allowed the problem to fester over time. Of course, there was an easy explanation that higher oil prices in the international market, sudden jump in the import of food items, especially wheat, and huge import of products like power generators was the main cause of the soaring deficit, but no worthwhile effort was made to increase the foreign exchange earning capacity of the country and restrict the level of non-essential imports.

The indifferent attitude of the authorities in the past could be ascribed to the fact that resolution of the problem could be postponed for some time by increasing external indebtedness or drawing down foreign exchange reserves of the country. But no such luxury will be available to the new set-up if it wants to manage the economy on sound lines. Continuing with this trend would result in further depreciation in the rupee rate, acceleration in the inflation rate, depletion of foreign exchange reserves, down-grading of Pakistan's credit rating and threaten the solvency of the country.

A stage could be reached when the country would find it difficult to make payments for its foreign liabilities, leading to disruption in industrial and capital goods imports, with highly negative consequences for employment level and growth prospects of the economy. The problem may be further compounded as Pakistan is likely to face a higher external debt-servicing burden as repayments of rescheduled non-ODA Paris Club stock would resume in 2008 and some foreign currency bonds will also mature.

We feel sorry for the incoming government that has inherited a major challenge on the external front but the reality has to be faced that no developing country can afford to incur a huge current deficit of around five percent of GDP for a considerably long period. To consume resources much beyond the level of existing GDP by borrowing from outside sources is an open invitation to trouble and embarrassment later on.

Reserve currency countries like USA and UK can indulge in such a luxury for sometime but countries like Pakistan whose currencies are not freely convertible have to learn to keep a proper balance between their foreign exchange receipts and payments. It is true that some of the exogenous factors like abnormal increase in the international prices of oil and food have added to our woes, but it is essentially our own responsibility to adjust ourselves to these shocks by undertaking necessary measures.

Economic managers of the country may propose the issuance of foreign currency bonds and other borrowing techniques to tide over the situation, but such alternatives increase external debt servicing and constrain the ability of the country to import in future. Hopefully, the incoming government would not try to find easy options but make a concerted effort to tackle the problem head-on.

Business Recorder [Pakistan's First Financial Daily]
 
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Time to catch up with biotech farming

EDITORIAL (March 30 2008): Brooding over the grim realities behind the too low and poor quality of cotton produced this year, a meeting at the Ministry of Food, Agriculture and Livestock is reported to have conclude that the government is left with no option but to provide the growers an improved, resistible variety of Bt cottonseeds for the next cotton season.

Thankfully, better late than never, it dawned upon them that the setback this time was owed, among other factors, to the use of poor quality non-certified seeds, non-availability of the right pesticides effectively to combat mealy bug and CLCV attacks. Mention, in this context, was also made of the use of poor quality Bt cotton seeds smuggled from India by private sector, despite the government's restrictions.

More to this, it also appears to have been deemed expedient to ask the growers to increase the per acre yield of seeds. It was noted that due to high temperature with higher level of humidity last year, seed germination would suffer a negative impact this year. As for the availability of seeds, it was contended that it was twice the quantity we had last year, implying that the country already has 60 percent of its seed requirement.

To avert the risks of crop damage from mealy bug and CLCV attacks, Minfal was stated to be is in the process of coming up with certain tips for the farmers to boost the efficiency of pesticides. Over and above all else, the meeting decided to initiate a three-year project 'Biological Control of Major Cotton Pests with Emphasis on Mealy Bug' in 2009.

From all indications, it sounded like some kind of a message to the new government that while the situation on the cotton front maybe serious enough, Minfal is properly seized with it in an appropriate manner, or so it appears. Be that as it may, the grim fact remains that Pakistan is lagging far behind other countries in so far as biotechnological farming is concerned.

It was only in October last year that the Member, Planning Commission on Agriculture had given the happy tidings of adoption of biotechnology crops in Pakistan, saying the matter was under serious consideration of the government, as over 500,000 acres were already under cultivation of Bt cotton.

Belated though that initiative appeared to be, however, it should have been attributed to the lead taken by the farming community, rather than the government. For, as then pointed out in these comes, the Planning Commission official himself, had revealed on that occasion, that Pakistan had yet to approve of any variety of Bt seeds for future cultivation, to the need for regularisation of which the government seemed to have eventually wisened.

However, we found even this as encouraging that Biotechnology Safety Commission had been put in place with a keen eye on approval of all Bt varieties on a fast track.

Again, as we had then pointed out, impetus to the programme might have been provided by the presence of Clive James, Chairman of International Services for Acquisition of Agri-Biotech Application (ISAAA), who had come to Pakistan with the idea of adding to its existing list of nine members already benefiting from Bt cotton.

He was then reported to have pointed out that Pakistan, as the fourth largest producer of cotton in the world could derive more benefit as its tenth member. Referring to biotech as a big opportunity for Pakistan, he had laid marked emphasis on its prospects for alleviation of poverty, a task on the high priority list of the government.

According to him, Global Biotech Crop area had increased by 12 million hectares (13%) to reach 102 million hectares in 2006, which should have inspired Pakistan to catch up fast with this unfailing trend. This should have been all the more so because over 90 percent or 9.3 million farmers growing biotech crops comprised small, resource-poor, farmers from the developing world, making a modest contribution to alleviation of their poverty though biotechnology.

To them also belongs India in a big way rather. It has significantly increased its cotton production from 308-kg lint per hectare, in 2001-2002, to 450-kg per hectare in 2005-2006. For once, it should beckon us to emulate the Indian example.

Business Recorder [Pakistan's First Financial Daily]
 
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Agriculture sector unlikely to meet fiscal year 2008 target despite reasonable growth

FAISALABAD (April 01 2008): Agriculture sector is likely to record reasonable growth during the current fiscal year but the prospects of achieving the target of 4.8 percent growth for the year still remain dim.

According to Ministry of Food, Agriculture and Livestock's (Minfal) statistics gathered by mid-February of FY08, the record sugarcane and maize harvests and anticipated good wheat harvest besides above-target growth in minor crops are unlikely to overcome the drag from the disappointing performance of some major Kharif crops like cotton and rice.

Minfal has estimated provisionally the wheat sowing area by end of January 2008 at 8400 thousand hectares as compared to 8420 thousand hectares by January 2007, which depict 0.2 percent decline in the wheat cultivation area, while the poultry sector that hit by bird flu virus might register some negative growth in the fiscal year.

Furthermore, price dispute between farmers and sugar mills during FY08 may adversely affect FY09 sugarcane crop, which would lead to sugar shortage next year and hike in the domestic sugar prices.

According to official sources, relatively weak aggregate performance of the crops in the face of strong international prices of most agri commodities, indicates not only the sector's vulnerability to the vagaries of nature but also the urgent need to enact reforms. It should target distortions in the incentive structure for farmers and the substantial wastage due to inadequate infrastructure.

For example, official sources mentioned that the disconnect between price signals to farmers and the prevailing international market prices is, in some measure, captured by the small decline in the acreage under wheat during the FY08 Rabi season. Wheat prices, both international as well as domestic retail prices, surged through most of the FY07, but farmers did not appear to be capitalising on this opportunity. Some farmers preferred to delay sowing. An active futures market for wheat could provide some benchmark price to the farmers to help them taking timely sowing decisions, sources mentioned.

According to agriculture experts, future market for agri-produce is even stronger in the case of sugarcane. While government announces procurement prices, sugar mills offer lower prices than the announced benchmark prices and clear payments with significant lags. Delay in crushing season also goes against the farmers as weight of sugarcane gets reduced with each passing day due to evaporation of water content in sugarcane, the added.

The latest data on FY08 Rabi crops indicates that area under wheat cultivation decreased by 0.2 percent, which is a consequence of delayed sugarcane crushing and extended cotton picking season. Other factors responsible for lower area under wheat cultivation are: (1) an anticipated reduction in availability of irrigation water during Rabi FY08, (2) delay in announcement of wheat support price, (3) rising input cost particularly prices of fertilisers and (4) load shedding (that reduced water supply from tubewells).

It has been reported that growers (in Multan, Rahim Yar Khan and Khanewal) shifted cultivation area from wheat to sunflower and also to gram pulse. According to Agri experts that increase in cost of wheat production (due to increase in DAP prices) growers have shifted soil to sunflower plantation; they are anticipating higher earnings as compare to wheat.

In wake of the given situation, the wheat harvest target of 24.0 million tonnes for FY08 is unlikely to be met. Meanwhile, the low temperature would have significant effect on yield, especially at early growth stage, which has brightened the prospects of good wheat harvest. The main beneficiary of rain spell are the barani areas (un-irrigated land), where approximately 14.0 percent of total wheat is sowed, they observed.

Business Recorder [Pakistan's First Financial Daily]
 
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Insurance sector profit up 102pc in CY07

Wednesday, April 02, 2008

KARACHI: The profitability of insurance sector soared by 102 per cent to Rs27 billion during the year 2007. The major upsurge was witnessed in EFU’s profitability whose after-tax profit swelled by almost 18 times to Rs14.5 billion.

The reason behind EFU General’s abnormal growth was the sale of its subsidiary company, First Capital Equity Limited (FCEL) said in its analytical report compiled on the basis of results of major insurance companies representing 88 per cent of the total insurance sector’s market capitalisation. The analysis said that profitability of the sector was jacked up by one-time capital gains.

A day earlier after announcement of EFU General’s financial results all major non-life insurance companies announced their full-year results for 2007.

The insurance sector’s underwriting profits declined by 72 per cent to Rs585 million, FCEL said and maintained that insurance companies might incur losses in their fire and motor segment. Net claims to net advances increased to the level of 71 percent versus 63 percent of previous. Almost all major insurance companies witnessed increased losses in Fire and Marine business in fourth quarter of 2007. The losses in these two segments were the consequence of riots that occurred across the country after the assassination of PPP leader Ms Benenair Bhutto on December 27, 2007.

Moreover, the investment income of the sector (dominated by the capital gains) soared by 119 percent to Rs27.9billion. Most of the insurance companies sold investment holdings and then re-bought them in order to avoid capital gain tax liability, which is likely to be enforced in the prevailing calendar year 2008.

“These transactions were only accounting entries which did not translate any impact on the financial health of insurance companies,” FCEL opined.

Insurance sector profit up 102pc in CY07
 
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KSE seeks further delay in levying CGT despite robust growth

Wednesday, April 02, 2008

KARACHI: Pakistan is passing through a tough time owing to a number of imbalances in the local economy. Inflation, current account deficit and trade deficit that remained at their historical high level since long are continuously hitting hard the middle and lower income groups.

Flaws in the economy occur as a result of poor policies and practices the government makes. One example of that practice is giving favour to a particular business, class, group or community over others in making and presenting the budget.

In fact, exempting or reducing taxes on a particular business and levying others heavily to achieve the set revenue target for the fiscal year starts creating problems at macro levels. The trickle-down affect of that inappropriate policy reach different income groups and impact them with different intensities.

Collecting of Capital Gain Tax (CGT) on share trading business in the country would start from next fiscal year (2008-09) as per decision the previous government took in year 2006.

On the other hand, the officials of Karachi Stock Exchange (KSE) have once again proposed to the Ministry of Finance to extend the date of exemption of CGT for another five years - up till 2013.

KSE is enjoying this tax exemption since 1974 and some officials in tax department are of the view that Pakistan is losing billions of rupees by not levying CGT in shares market.

Citing from last Economic Survey of Pakistan, Director General, Large Taxpayers Unit, Mukhtar Gondal says that the national exchequer is losing around Rs112 billion by not collecting CGT on shares market.

KSE authorities and brokers are still striving hard to get CGT exemption extended for another period. They argue that this tax would further lower the turnover in the market.

The introduction of Capital Value Tax (CVT) in Karachi bourse on July 01, 2004 at the rate of 0.01 per cent and its doubling to 0.02 per cent in Federal Budget for 2006-07 has resulted in reducing the average daily volume in ready market to 230 million shares from 389 million shares early in 2004 and before it, according the KSE budget proposal for 2008-09.

The CVT is applied on share purchasing while another tax i.e. Withholding Tax (WHT) is collected at the sale of stocks at the rate of 0.01 per cent. Capital Gain Tax, if applied from July 01, 2008, would be the third tax on securities transaction in row, it was learnt.

Contrary to the reduction in trading volumes, as highlighted by KSE, the collection of revenue under CVT on securities transaction increased remarkably.

“The rate of CVT on stock exchanges was increased to 0.01 per cent to 0.02 per cent on the purchase value of shares during fiscal year 2006-07. The collection of CVT from stock exchanges has increased from Rs182.6 million to Rs425.7 million during first quarter of fiscal year 2006-07. Thus an additional collection of Rs243.1 million was realised from this source,” said CBR in its quarterly review for the period of July to September 2006.

As a matter of record, the doubling of CVT rate on share business did not lower the amount of revenue collected on this counter and since then it was increasing all the times.

“The CVT collection for the first eight months of current fiscal year (2007-08) has increased to Rs2.783 billion from Rs2.487 billion during the corresponding period last year - recording a notable surge of 12 per cent,” officials told in tax collection department.

Some of the analysts believe that reduction in trading volume was not due to CVT. The retail and large individual investors had lost confidence in stocks business after the March 2005 and March 2006 scandals on KSE. Many investors were deprived of billion of dollars collectively due to these scams and it is alleged that the broker community was behind the staged market fall.

Nonetheless, the KSE has recorded a 40 per cent growth in 100-Index during the calendar year 2007 - improved to 14,076 points on December 31, 2007, from 10,040.50 on January 03, 2007. The market capitalisation has gone up by 56 per cent during the same period from Rs2,771 billion to Rs4,323 billion registering an increase of Rs1,552 billion.

The local bourse was registering robust growth all the times, thus, further taxing on securities transaction should be levied in the coming federal budget for the fiscal year 2008-09, said FBR officials.

Independent economists argue that investment in stocks market is of a non-productive nature, which should be taxed to encourage investment in productive sectors. This would help in generating employment and alleviate poverty.

Also, increased taxation in shares business would reduce speculation and encourage the long term investors at the local bourse. Moreover, tax contribution of stocks market would increase to the required level.

KSE seeks further delay in levying CGT despite robust growth
 
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Seafood smuggling to Iran on the rise

Wednesday, April 02, 2008

KARACHI: Seafood exporters are blaming the authorities for delay in the efforts to lift the EU ban on seafood of Pakistani origin.

The efforts initiated by the caretaker government are standstill and the plans are not pragmatic as there is no outcome yet, exporters said.

This has lead to smuggling of fish to Iran and fishermen at present have forgotten the EU issue and trying to net maximum from this opportunity as they are getting more than double price of their catch.

Sardar Hanif Khan, Chairman Pakistan Seafood Industry Association, said that seafood-processing factories are facing closures due to inefficiency of the authorities and the consistent ban on exports to the EU.

The ban has opened unofficial channel of seafood exports leading to a price hike and shortage of raw material, especially shrimps Hanif said fuming that the government has not yet taken any action. The smuggling of seafood was not beneficial in the long run, he said.

Trade Development Authority of Pakistan (TDAP) had devised a long-term plan to improve the standard of the harbour to convince EU authorities to lift embargo from seafood of Pakistani origin. However, the TDAP has not given any time frame as to when would this plan would be implemented

The caretaker chief minister of Sindh, R Justice Abdul Qadir Halepota had inaugurated an auction hall built at a cost of Rs4.5 billion at the Karachi Fish Harbour. The project was completed in consultation with the United Nations Industrial Development Organisation (UNIDO), according to the requirements of the European Union.

The Auction Hall K-II has been specially designed for the export of seafood to the EU, which had reservations regarding onboard boat and marketing facilities at the harbour.

Marine Fisheries Department (MFD), which is supposed to update the EU regarding the improvement at the harbour but they seem least bothered about it and have not yet informed the EU, since there is no further progress regarding the ban issue, stakeholders in seafood business informed.

Seafood smuggling to Iran on the rise
 
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Chinese subsidy cut to help Pak textile

New 28-head embroider to be displayed at Textile Asia​

Wednesday, April 02, 2008

KARACHI: Chinese textile industry is now facing major problems as the Chinese government has slashed subsidy to the industry from 18 per cent to 5 per cent, which will help Pakistan in competing with its major regional rival, Asif Ali Rashid, CEO of Almurtaza Machinery told The News.

Almurtaza Machinery Company (AMCL) would display latest embroidery machines in the 5th Textile Asia International Exhibition scheduled from April 4 to 7 at the Karachi Expo Centre, the CEO said at the company’s head office at Shahra-e-Faisal. This year, Almurtaza is featuring Tajimas Sequin Device II, a twin device which is the first of its kind.

It is now possible to embroider a maximum of four different sizes, shapes and colours on each head. This device will be placed on Tajima’s new 28-head machine, especially made for the South Asian market, where Shalwar Qameez are used including Pakistan, India, Sri Lanka and Bangladesh.

This next generation sequin device permits more design options and improves production efficiency. AMCL will also be displaying first time the Coiling/Taping Device with Chenille embroidery machine.

AMCL is also featuring a laser bridge developed by SEIT Electronica of Italy, which will be demonstrated on a Tajima embroidery machine in the upcoming Textile Asia 2008.

A laser bridge combines the feature of embroidery machine and laser cutting in one smooth operation, which helps prepare unique apparel and textile items with maximum value addition.

Asif Ali Rashid said: “In the textile sector, Pakistan has now some good opportunities when Chinese textile industry is facing 30 per cent higher production cost because of currency appreciation and cut in subsidy by the government. Similarly, Indian textile sector is facing currency appreciation which helps Pakistan in competing with these two countries, but Bangladesh having an export edge in the US and Europe is still in good position.

“Pakistani companies need to develop brands and then market them,” he said adding, “We always lag behind to make the most of our products.”

Pakistani companies always talk about high cost of production and quota problems but always neglect one of the most important things, the marketing. Some Pakistani companies are making 30 per cent more profit on their products with the same quality as their competitors offer just because of their marketing strategies, he added.

http://www.thenews.com.pk/daily_detail.asp?id=104368
 
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Neo - do you know what Pakistani government subsidies for the textile sector amount to, and how they compare to the Indian subsidies (R&D support and all manner of "hidden" support)? Bushroda?

I know that the last couple of years the GoP has flat out refused to provide much more in way of Govt. support, arguing instead that the Textile sector should go in for BMR, mergers and increase in productivity and efficiencies.
 
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Found two interesting articles to compare levels of Govt. support for textiles in India and Pakistan:

No subsidy for textiles: Mushtaq Cheema
Sources:The News.
ISLAMABAD: The government will not extend any subsidy to the textile industry for enhancing its dwindling export, rather it would facilitate the sector by enforcing policies.

Talking to media-men on Monday, Federal Minister for Textile Industry, Mushtaq Cheema, said that subsidy is not a remedy for declining textile export, but the sector has to be more efficient by competing with its rivals.

The sector should focus on skill development, productivity enhancement and reducing cost of doing business through efficiency, the minister added. The sector should be balanced by organising and all sectors should feed each other and not be dependent on government funding, otherwise, the industry would not survive, said Cheema.

Without attracting big investors or orders from abroad, the weaving sector cannot compete or flourish, adding that the sector is also not organized; so as to get loan facilities for expanding their businesses and is performing below its capacity, said the minister.

The minister said that there should be harmony in the finished products otherwise, the exports would not be increase. To a question about textile policy, the Minister said, that it would be approved at the end of June or in the first week of July and the process of consultation with the stakeholders is on.

The government wanted to introduce a complete policy for the sector so that all sub-sectors should work as one unit for the overall betterment of the sector, he added. Zafar Mehmud, Secretary Textile said, that garment cities would be established within in 2-3 years while the garment city in Karachi would be established in Pakistan Textile City Limited and in Lahore it would be set up in Sundar Industrial State.
INDIA: Govt plans to modify TUFS (May 26, 07)
NEW DELHI: The government, with an aim to give additional benefit of 10 percent capital subsidy to textile companies plans to modify the Technology Upgradation Fund Scheme (TUFS) in the next couple of months, Textile Commissioner J N Singh said here on May 24.

J N Singh while speaking at the 'Medical Textiles 2007' workshop organised by FICCI added that they are looking to modify TUFS in the next 1-2 months and the additional benefit of 10 percent capital subsidy would be over and above the 5 percent interest reimbursement in line with specified processing machinery.

Further, the government was considering setting standards on the lines of international ones for different items of technical textiles to facilitate adherence to stringent functional requirements and parameters, while emphasising the need for maintaining quality standards in technical textiles.

He informed that the production and consumption of technical and medical textiles in India would increase rapidly in view of the buoyancy in economy and government initiatives and the medical textile market is likely to grow to Rs 2,260 crore by 2011 from Rs 1,260 crore in 2006-07.

The government would also setup six Centers of Excellence for major segments of technical textiles at an investment of Rs 100 crore at Textile Research Associations (TRAs)/IITs with one centre exclusively for medical textiles.

Based on that article, the GoI is still providing about 15 percent support (under the guise of technology upgradation).
 
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The government of Pakistan in 2005-06 also approved many incentives for textile sector, including, due to which Textiles exports increased from mere $5.2 billion to $11 billion:

Investment Policy & Incentives for Vision 2005-2010:

• Whole of textile sector is included in list of value added industries.
• Lowering custom duty to 5% on imported machinery if not available/manufactured locally.
• Tax relief: Initial Depreciation allowance (IDA) at 50% of machinery & equipment cost.

Pakistani government 2006 approved “Technology-based Industrial vision and strategy for socio-economic” which calls for technology up-gradation, human resource development, and establishment of a fully integrated chemical industry in the country.

Yes, the textile sector faces external threats also, as an anti-dumping of 5.8% has been imposed by the European Union. This renders us commercially uncompetitive compared to our traditional competitors i.e. China and India.

Government of Musharraf promoted cotton growing culture in rural areas of Balochistan providing official patronage to the local growers of cotton. Many switched over to cotton from rice sowing. Three ginning factories have been established in Naseerabad district and the government plans to establish two more ginning factories at Khuzdar and Lasbela.

In the year 2000-01, the cotton was cultivated on 100,000 acres of land and Baluchistan produced 112,000 bales of superb quality cotton, more than the estimated target of 100,000 bales. During FY 2001-02, 150,000 acres of land brought under cotton cultivation and the set target was also achieved.

This local growth of cotton will make us less dependent upon cotton imports, thus saving the cost of manufacturing for textile goods.
 
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‘Privatisation programme to be made worker friendly’

ISLAMABAD: The Privatisation Programme will be made people and workers friendly, which will contribute to the overall economy by generating more taxes and employments, increasing production and improving quality and efficiency, said Syed Naveed Qamar Federal Minister for Privatisation. The PPP led government has decided to bring on board trade unions in the privatisation process of the State Owned Enterprises (SOEs) in order to safeguard their legitimate interests.

It has been directed to the Privatisation Commission to put up realistic timeline for the privatisation of public sector entities in a professional manner. Syed Naveed Qamar Federal Minister for Privatisation has conveyed this to the officials of the Privatisation Commission while chairing a meeting of the Privatisation Commission. The minister was given an update regarding the ongoing transactions including the international offerings of GoP shares through Global Depository Receipts (GDRs) of Kot Adu Power Company (KAPCO), Habib Bank Limited (HBL) and National Bank of Pakistan (NBP). The minister was also apprised about the progress regarding the privatisation process of SME Bank and industrial units transactions of Hazara Phosphate & Fertilizers Limited (HPFL), Pakistan Machine Tool Factory (PMTF), Heavy Electrical Complex (HEC) and National Power Construction Company (NPCC).

The target of privatization is $3.5 billion through privatisation proceeds during the ongoing fiscal year. During the current fiscal year 2007-08 from July 2007 to November 2007 an amount of $440.597 million equivalent to Rs 26.869 billion have been received through privatisation proceeds by the Privatisation Commission. The privatisation Program, apart from GDRs, through sale of public sector enterprises for this fiscal year was targeted to fetch Rs 114 billion against which an amount of Rs27 billion has already been achieved during First half.

Daily Times - Leading News Resource of Pakistan
 
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FBR announces ‘Export Oriented Unit Scheme’

ISLAMABAD: In order to expand Pakistan’s exports oriented industrial base, the Federal Board of Revenue on Tuesday announced Export Oriented Unit Scheme.

According to S.R.O. 326(I)/2008 issued here, under this scheme, exemption from customs duties, sales tax and federal excise duty would be available on all the goods imported into and exported from an Export Oriented Unit including import of raw materials, plants machinery and other required products. Exemption from customs duties, sales tax and federal excise duty would be subject to the provisions of the Export Oriented Units and Small and Medium Enterprises Rules, 2008, notified here through S.R.O.327(I)/2008.

Humayun Akhtar Khan, Former Commerce Minister while presenting Trade Policy 2007-08 had announced introduction of such scheme for promotion of exports from the country. Export Oriented Units and Small and Medium Enterprises Rules, 2008 would be applicable only to the units licensed as export oriented units which are registered as manufacturers-cum-exporters under the Sales Tax Act, 1990. These rules shall come into force at once.

According to the definition “export oriented unit” includes a small and medium enterprise and means a manufacturer having in-house manufacturing facility located in the tariff area of Pakistan and licensed as such by the Collector under rule 3, and exporting , at least 80 percent of its production to other countries if established before 1st July, 2007; or (ii) 100 percent of its production to other countries if established on or after 1st July 2007.

“Input goods” means all goods whether imported or procured locally by an Export Oriented Unit from the tariff area such as raw materials, accessories, sub-components, components, assemblies, sub-assemblies used in the manufacture of output goods as approved by the Collector in the analysis certificate; “licensee” means any person or firm to whom license is granted.

Any person or firm desirous of establishing or operating an export oriented unit shall apply to the Collector along with the following documents, namely: - the site plan of the proposed export oriented unit indicating the location of the premises and the details of the total area, covered area and manufacturing area and separate storage areas for manufactured goods, factory rejects and wastages. National Tax Number certificate; banker’s certificate, directly forwarded by the bank to the Collector in a sealed envelope, regarding financial transactions of the applicant during the last two years; Memorandum and Articles of Association in the case where the applicant is registered under the Companies Ordinance, 1984 (XLVII of 1984), or partnership deed if it is a partnership firm; copy of the national identity card of owner and directors of the company; general bond in the form set out in Appendix-II; lease or tenancy agreement with the written permission from the landlord to use the premises as an export oriented unit for a period of at least two years; certificate from supplier of fire fighting equipment installed in the premises regarding its validity date; comprehensive insurance policy covering all risks such as fire , burglary, riots, strikes, malicious damage and allied perils, issued by an insurance company having paid up capital not less than Rs.120 million, registered with the Controller of Insurance, Ministry of Commerce, in the sum equal to the maximum face value of proposed license, covering the total amount of the customs-duties, federal excise duty, sales tax and any other tax leviable on the imported goods or locally procured goods, in an export oriented unit.

An undertaking by an insurance company duly approved by the Controller of Insurance, Ministry of Commerce, on the stamp paper undertaking that- full premium under the aforesaid insurance policy has been duly received; in case the licensee does not make the required stock declaration in time, the company shall immediately inform the Collector; and (iii) breach of warranty by the licensee or non-compliance or omission of any nature by the licensee shall not prejudice any claim lodged by the Collector. Recommendations of the relevant representative trade association, or Chamber of Commerce and Industry, or Trade Development Authority of Pakistan.

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