Chairman Aptma Punjab Gohar Ejaz and senior members have expressed their extreme disappointment over the abrupt reduction of yarn export quota from 50,000 to 35,000 tons per month. The reduction, they said, was contrary to the assurance extended by the President of Pakistan and members of the Federal Cabinet to spinners at their meeting with him in early January.

Aptma member mills were given the understanding that matter would not be unsettled up to June 2010. In a press conference, it was pointed out that the January export figures showed robust export growth from December to January all across the value chain which indicated that there was no underlying justification for reducing the quantum of yarn exports by another 15,000 tons per month. It is reprehensible that while cotton was freely exportable but there was export control on yarn.

The speakers highlighted that yarn manufacturers had to import cotton at high international rates and it was not feasible to add value thereto and sell finished yarn at subsidised low price. Cotton prices had risen by 60 percent in the international market. It was internationally priced at 50 cents per lbs which has increased to 80 cents per lbs now.

The value added sector, the most inefficient, was already the beneficiary of 20 percent yarn price decrease. It was reasoned that any support desired to be extended to the garment sector should not be done as a cross subsidy realised from the spinning sector, rather the government should support them directly from its own resources.

Already, the value-added sector was pampered enough by different supports like duty drawbacks, export re-finance etc. It should learn to stand without crutches. There was overwhelming opinion that shortage of cotton and simultaneous yarn export embargo would not only adversely affect the spinning industry but textile exports all across the value chain would be seriously threatened. The only way out of the quagmire was the restoration of Free Trade Mechanism and immediate end to all restrictions on export of yarn.

Source: Business Recorder