PYMA protests 400% hike in tariffs
Yarn Merchants Association has pointed out that the local manufacturers are still using outdated machines, which are not energy efficient and such energy losses are built into yarn prices. photo: file
The Pakistan Yarn Merchants Association (PYMA) has raised alarm over the recent hike in electricity and gas tariffs and is urging the government to reverse them immediately, warning of catastrophic consequences for industries and domestic exports.
“This huge electricity and gas tariff hike is an anti-business and ant-industry initiative,” said Sohail Nisar, Senior Vice Chairman of PYMA. He has appealed to the Prime Minister Shehbaz Sharif and Federal Minister of Energy Power Division Engineer Khurram Dastgir Khan to take action and reduce the cost of doing business in the country.
Muhammad Jawed Bilwani, Coordinator of the Value-Added Textile Forum, believes that the export sector, particularly the value-added textile sector in Pakistan, is on the verge of collapse due to the government’s neglect of the economy. He blamed the government’s anti-business and anti-export mind-set for the country’s current economic turmoil.
The industry is facing closure due to an extreme liquidity crunch and stuck sales tax refund claims worth billions of rupees, leading many industrialists to plan to shift their industries abroad. Unavailability of gas, lack of uninterrupted electricity supply, shortage of industrial inputs or raw materials, and excessive delays in refunds to exporters are also adding to the sector’s woes.
Approximately 60% of exporters’ liquidity is stuck as the government has stopped all sales tax refund claims, said Bilwani. He urged the government to take immediate action to save the export industries, which holds more than 60% share of the national exports.
Instead of making electricity and gas more expensive, the government should reduce tariffs to pull down the cost of doing business, according to Nisar. “The continuous rupee depreciation and rising dollar rates have already created difficulties for the importers of raw material,” he added.
“The increase of over 400% in electricity and gas tariffs will take the cost of doing business to an unbearable extent, resulting in disastrous effects on the industries and domestic exports,” he warned.
Pakistan’s textile exports for February 2023 were valued at $1.18 billion, indicating an 11% decrease on a month-on-month (MoM) basis, as per the latest data available. However, in Pakistani rupees terms, exports increased by 2% MoM to Rs315 billion.
According to Textile Analyst at Topline Research Nasheed Malik, value-added textile exports dropped by 13% MoM, primarily due to declining demand for readymade garments and knitwear. Towels and bed-wear exports also fell by 8% and 7% MoM, respectively. “The decline in demand for textiles is a global issue, with Bangladesh, China, and Vietnam also experiencing a decrease in textile exports,” explained Malik. Comparatively, Pakistan’s textile exports in February 2022 were down by 30% year-on-year (YoY).
Published in The Express Tribune, March 29th, 2023.
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