Punjab knitwear industry refusing orders due to energy crunch

Lahore - The Punjab knitwear industry is continuously refusing orders placed by the foreign buyers only because of energy issues, despite having huge capacity of high quality production.

This was stated by Usman Jawwad, chairman of Pakistan Hosiery Manufacturers Association, while briefing the members of Lahore Economic Journalists Association about the knitwear scenario. He said the power supplied by the state is most expensive in the region that impacts cost. Gas is sparkly available in Punjab that deprives the industry of producing power at low cost. He regretted that the government has recently subjected furnace oil to addition sales tax increasing the cost of the alternate fuel available for self generation.

Chairman PHMA said that high cost of doing business is only because of inept government policies and its inability to implement its own policies. He said extra ordinary delay in the sales tax refunds is one example. He said there are exporters that have not received refunds on dozens their export consignments spread over two years. “How can anyone increase exports when its liquidity is sucked by the government though delay in genuine refunds?,” he asked. He said exports according to stated government policy are zero rated but there are many taxes paid during the manufacturing process that are not refunded due to non documentation of economy. He said ensuring full documentation of economy is governments’ job and exports should not be penalized for its failure.

Former chairman Shahzad Azam Khan advised the government to take the compliance issue of 27 conventions signed with EU to ensure continuity of GSP Plus status. He urged the government to remove bottlenecks that hamper exports. He said knitwear is the most labor intensive industry of the country employing over a 1.5 workers including those employed by industries catering to domestic needs. He said about 1200 organized units spread in Karachi, Lahore, Faisalabad and Sialkot are operating the country which is about the same as 15 years back. Though export of knitted garments shows an ever growing trend over the past many years but inconsistent government policies and failure to match facilitations provided to this sector by India and Bangladesh has resulted in closure of numerous smaller units. There are certain compliance issues like water treatment plants that are out of reach of small knitwear units. Despite numerous promises no government has as yet installed a common water treatment facility for small knitwear units so that they could qualify for exports.

Former PHMA chairman north Zone Adil Butt said some features of new textile policy are attractive; special rebates on exceeding exports by 10 percent to knitwear exporters should be reduced to any increase in exports to motivate small exporters. He hoped that the new policy would be implemented in letter and spirit and not shelved like the previous 2009-13 policy after announcement.

President LEJA Mohammad Riaz thanked the PHMA for the capacity building session organized for the economic journalists.

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