Garment-makers still waiting for remaining R&D grant

Garment-makers still waiting for remaining R&D grant

Tuesday, June 02, 2009
The International News
By our correspondent

LAHORE: The Pakistan Readymade Garments Manufacturers and Exporters Association has said the government must release the remaining 60 per cent research and development grant for 2007-08 held by the central bank and issue instructions to banks not to charge mark-up on loans in 2009.

PRGMEA Chairman Jamshaid Hanif stated this while briefing the Lahore Economic Journalists Association at the PRGMEA House here. He said the garment-making industry had come under severe stress not only due to the ‘flawed’ policies of the government but also because of its failure to honour commitments to release the unfairly held payments to exporters. Besides the R&D, he said, the government had not yet cleared sales tax dues of garment exporters for the past four years.

He said global recession had hit badly most of the labour-intensive sector of textiles and the government had remained aloof to the genuine problems of the industry. “This behaviour of the government is in sharp contrast to prompt actions taken by the Chinese, Indian and Bangladeshi governments which announced immediate incentives for their clothing sector when the global recession threatened their exports.”

He said the inaction on the part of the government had prevented Pakistan from taking advantage of its low labour cost, which was less than that in India, China, Indonesia and Sri Lanka. Only Bangladesh and Cambodia had lower wages in the garment industry than those in Pakistan.

He said escalation in oil prices, coupled with frequent load-shedding, had devastated the garment industry. Workers, who were earning a handsome amount based on their high productivity, were losing heart and were leaving the profession as they could not produce much in the face of 8 to 12 hours of load-shedding, he added.

“This is a dangerous trend as the industry is losing highly skilled workers due to power shortage.” He warned that soon the industry would face an acute shortage of skilled labour if power disruptions continued at the current levels.

In the deteriorating economic situation, he said, the industry expected the government to protect jobs by supporting the sectors under stress, adding priority in that regard should be given to the labour-intensive sectors like garments and knitwear.

“All is not lost and the government can still bolster garment industries by taking some prudent steps in line with the measures taken by competing economies.” He said the R&D grant, which was withdrawn in the last budget, should be resumed in the coming budget and the rate of export refinance should be brought down to three per cent from current seven per cent.

He said the industry had to pay 2.5 to 3 per cent service charges to banks in addition to the export refinance rate announced by the central bank. Service charges should be cut by 50 per cent as export refinance has almost 100 per cent payback record. Hanif said the garment industry was in a position to give much better performance if assured a level-playing field compared to its competitors.