Fibre dumping hurting local industry

Competition Commission finds no monopoly in polyester staple fibre industry.

ISLAMABAD: Four countries have been dumping fibre in Pakistan, which is not only shrinking the size of the polyester staple fibre (PSF) industry, but may also increase the import bill, revealed a Competition Commission of Pakistan (CCP) study.

The anti-trust watchdog's study has found that the PSF industry is subject to unfair international competition, as China, Indonesia, Thailand and South Korea are selling their products in Pakistan at much cheaper rates than in their homelands.

The CCP report primarily prepared for competition assessment of the PSF industry finds no monopolistic activity by local PSF market players, but raises alarm over dumping concerns.

PSF is a type of fibre that is used in yarn manufacturing, which is later woven into value-added textiles. It is estimated that the domestic PSF industry saves $225 to $250 million annually on account of import substitution and an unfair treatment to the industry may lead to closure of production units.

“Low tariffs and weaknesses in the application of the trade remedy law the anti-dumping mechanism have exposed the PSF sector to unfair foreign competition, “ states the report. It further states that domestic PSF production declined by 15 per cent over the last five years.

The National Tariff Commission had imposed anti-dumping duties on PSF imported from China, South Korea, Indonesia and Thailand.
None other than the All Pakistan Textile Mills Association (APTMA) challenged the decision in courts, and consequently, NTC was barred from collecting these duties.

CCP finds APTMA's claim of collusive behaviour of the PSF industry unfounded. “APTMA's assertion regarding collusion or cartel of PSF producers is not supported by evidence, “ revealed the study.

The cost of doing business has increased manifold, cheap imported PSF is available from various countries, and closure of a major PSF unit have contributed to a decline in domestic production from 426,342 tons in 2004-05 to 364,354 tons in 2008-09.

The study states that the cost of doing business is rising in the country, particularly energy costs are not competitive compared to other PSF manufacturing countries in the region.
Closure of Dewan Salman PSF unit is a setback for the industry and PSF users, added the report.

Published in The Express Tribune, March 24^th, 2011.