PRGMEA appeals PM for yarn producers’ forensic audit to break cotton cartel

by index360

Lahore: The Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) has made an appeal to Prime Minister Imran Khan to pass directives for the forensic audit of the yarn producers to break cartel of cotton mafia in line with the actions taken by the PTI government against sugar lobby as cotton mafia has so far proved to be stronger than the sugar mafia in the country.

In an open letter to the PM, it was pointed out that the textile manufacturers have increased the rates of yarn by more than 40% in a very short span, creating artificial shortage on the excuse of lower production of cotton in the country despite declining prices of cotton in the international market, hitting the apparel sector exports badly.

PRGMEA Central chairman Sohail Sheikh said that the Imran Khan government will have to take serious steps to break the textile industry cartel, giving a strong message that no cartelization would be allowed to manipulate prices in future and if they commit such crime they have to face the full brunt of law.

He asked the Federal Board of Revenue (FBR) and Federal Investigation Agency (FIA) to conduct raids on the warehouses of yarn dealers who have been hoarding a huge quantity of yarn to create artificial shortage and manipulate the rates in connivance with the manufacturers, taking advantage of record low produce of cotton in Pakistan.

PRGMEA Chief Coordinator Ijaz Khokhar said that arrival of low-cost cotton yarn from neighboring country through land route, on the approval of ECC, could have broken this powerful textile cartel, shaking the monopoly of yarn producers to fix the rates artificially very high.

Moreover, the deferment of cabinet to allow yarn import via Wagha has not only damaged the clear stance of the government’s zero tolerance against all kinds of mafias like sugar, flour, petroleum and IPPs but also sent a wrong message to the international buyers that Pakistan is facing yarn shortage and authorities are not allowing raw material import. So, Pakistan value-added textile export industry cannot fulfill the new orders timely due to short and expansive raw material.

PRGMEA Central Chairman Sohail Sheikh said that another major factor which has been affecting the exporters is the sharp depreciation of dollar against rupee, as the exporters had already offered their annual prices to the buyers at the parity of Rs162 per dollar.

He added that the third major factor which is hitting the exporters hard is sharp hike in sea freight charges which have gone up by at least 700%. In this case, it is clear cut message to the government that in the coming months it is feared that the country may face the declining of apparel exports, resulting into layoffs especially in apparel sector.

PRGMEA demands the government to allow import of cotton yarn from all around the world, exempted from all types of taxes and duties, for at least six months to arrest the commodity crisis that continues to hit the local market.

Globally, the prices of cotton have dropped significantly but the commodity is still costlier in Pakistan. Announcement of ECC proposal to allow import of cotton yarn from India had temporarily helped reduce the cotton yarn rates in the local market, but the cancellation of trade with the neighboring nation again escalated the commodity rates.

“The value added textile exporters are facing financial crunch, as their cost of manufacturing has jumped because of dollar depreciation against rupee from 164 to 153 and increase in prices of cotton yarn by more than 40%, besides 700% rise in sea freight charges,” he said.

“Now all the stakeholders put the ball in the court of commerce ministry to give them the way out how to sustain the value-added textile exports. Therefore, it is direly needed that quick decision should be made to save the value-added textile industry which contributes more than 52% in overall textile exports,” he said.

He recalled that Prime Minister Imran Khan had committed to hold exclusive meeting with the apparel sector. “Now we request him to call a meeting at the earliest so that ground realities of the apparel sector could be highlighted in details in one-on-one meeting.”

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