The low reliance of Pakistani textile and apparel exporters on imported artificial fibres is because of exorbitant tariffs and regulatory duties on essential raw materials, according to the World Bank, which said Pakistan’s tariffs on intermediates average 8 per cent—four times the average in East Asia—and its regulatory and additional duties are also high. The World Bank Group, in its recent flagship report on global value chain (GVC), said a very small number of textile exporters in the country are presently availing duty suspension schemes like duty and tax remission on exports for their imported intermediates as remission takes much longer time for them. “In practice, approvals for remission take on average 60 days—twice the time specified by law—and clearing customs after approval takes an extra 5-10 days,” the agency said. “Thus, Pakistani exporters of textiles and apparel—the country’s major export sector—rely mostly on domestic cotton rather than on imported artificial fibres, such as polyester (the leading input to the fast growing global imports of apparel),” the bank said in the report, titled ‘Trading for Development: In the age of global value chains’. “For that reason, a mere 3 percent of textile and apparel exporters use the scheme. In Bangladesh, by contrast, obtaining approval for duty suspension on intermediates takes on average 24 hours, and about 90 per cent of textile and apparel firms use the scheme,” according to the report. The bank enlisted Pakistan among the countries where participation in global value chain paces up slowly in a market environment when the sectoral composition of global value chain flows is increasing globally. The World Bank, however, sees strength in the country’s agriculture and livestock sector that could help it improve its participation in the global value chain.
