APTMA Against Anti-Dumping Duty On Polyester Yarn

The textile sector has expressed hope that anti-dumping duty on polyester yarn will not be imposed as importers have already to pay 6 percent import duty on it, which is not refunded even after exports.

Globally 55 percent of the fiber used by textile companies as important raw material is manmade while only 45 percent of it is made from cotton. In Pakistan, 75 percent of fiber used in textiles is made from cotton.

"We want to come at par with the world but are constrained by the incorrect government policies that are affecting local textile market,” said Chairman All Pakistan Textile Mills Association (APTMA) Ahsan Bashir.

He said the government had provided duty protection under the sovereign guarantee to a foreign investor who established a purified terephthalic acid (PTA) plant for manufacturing synthetic polymer 15 years ago in Pakistan.

He said this duty protection (began with 25 percent and gradually declined to 15 percent) was to ensure that locally manufactured polyester fiber could keep rates slightly below the import cost of polyester fiber.

He said since the expiry of the sovereign guarantee in 2008, the government continued to impose some duty on its import and denied duty drawback on exports that were otherwise zero rated in Pakistan like rest of the world.

Chairman APTMA said 75 percent of all textiles produced in the country are exported in one form or the other–a fact verified even by the Federal Board of Revenue (FBR). The industry, he added, does not get any duty drawback on the polyester component of export of fabric, for example, garment, bed linen, or any other textile products.

"Ironically, local spinners produce polyester or blended yarn by paying 6 percent non-refundable import duty while imported yarn is allowed access to the market at zero percent,” said Gohar Ejaz, group leader of APTMA.

He said even the punitive anti-dumping duty is not refunded on exports. Even after paying import duty and other import expenses, the landed cost of imported polyester fiber turns out to be Rs166 per kg while the locally produced yarn is being sold at Rs177, he added.

He said the local industry, according to the documented statistics, operated at 100 percent capacity in 2011 and the largest local manufacturer has added additional capacity of 227,000 tonnes, bringing total capacity to 600,000 tonnes. Out of total annual polyester fiber demand of 500,000 tonnes, the spinners import on average 100,000 to 150,000 polyester fibers annually as the local polyester manufacturing facility stands at only 400,000 tonnes, he added.

"We welcome addition in local production capacity of manmade fiber,” said Rahim Nasir who is a major spinner using polyester fiber. However, he added, the local manufacturers should operate on their own without government crutches. He said they should bring their prices at par with global rates.