KARACHI: The import of second-hand clothing continues to thrive despite falling inflation during the outgoing fiscal year, official data released on Thursday showed.
The trend hints at pressure on the household budget forcing people to opt for cheaper used garments.
Importers attributed various reasons for rising import of used clothing. Despite the fact the new clothing is available in a wide price range, for many consumers, new garments remain unaffordable.
Used clothing arrival under the heading ‘worn clothing’ during July-April 2014-15 stood at 390,939 tonnes ($101.6 million) as compared to 369,957 tonnes ($147m) in same period last fiscal year.
Import of used clothing went up to 457,600 tonnes ($182.2m) in 2013-14 as compared to 375,485 tonnes ($146m) in 2012-13. Imports were 353,831 tonnes ($128.6m) in 2010-11, figures of the Pakistan Bureau of Statistics (PBS) revealed.
Food and non-food inflation in July-May 2014-15 stood at 3.5pc and 5.5pc respectively. Food and non-food inflation in 2011-2012 was 11pc each while in 2012-13 food and non-food inflation stood at 7.1pc and 7.5pc. In 2013-14, food and non-food inflation was 9pc and 8.3pc.
Muhammad Usman Farooqui, General Secretary, Pakistan Second-Hand Clothing Merchants Association (PSHCMA) said many people have become permanent customers of used clothing in order to manage soaring daily expenses.
“The government is trying to improve the living standard of the masses but it has not given any relief on the imports of used clothing. In last year’s budget, the government raised withholding tax on import to 6pc from 2pc while sales tax was enhanced to 9pc from 6pc,” he said.
He recalled that former president Asif Ali Zardari had increased the withholding tax to 2pc from 1pc besides imposing 5pc sales tax. During Musharraf’s government, imports were exempted from sales tax while withholding tax was 1pc.
Farooqui said no government in the past had kept the duty rate more than 5pc as used clothing items are for the common man.
“Bureaucracy has imposed taxes and duties due to rising imports but it is ignoring the real cause behind the huge imports of second-hand items,” he commented.
He urged Prime Minister Mian Nawaz Sharif to reduce withholding tax to 2pc besides bringing down sales tax to 5pc in order to provide relief to the masses.
Social Safety Nets: According to Pakistan Economic Survey 2014-15, the government is fully committed to follow a sustained poverty reduction strategy and allocate a minimum of 4.5pc of GDP to social and poverty related expenditures.
The government prioritised 17 pro-poor sectors through the Medium Term Expenditure Framework (MTEF) in the PRSP-II. Expenditure on pro-poor sectors in 2010-11 stood at 13.24pc of GDP, the survey notes.
In 2011-12, these were 11.55pc of GDP and in 2012-13, 13.10pc of GDP.
During 2013-14, total expenditures for these sectors were slightly increased and amounted to Rs1,934.095bn, which was 14.16pc of GDP. During July-December of the current fiscal year 2014-15, Rs667.47bn expenditures have been made in these sectors.
PES 2014-14 notes: “Benazir Income Support Programme (BISP) is continuing to eradicate extreme poverty through provision of cash transfers. Present government has not only continued the BISP but has also increased the cash grant to Rs1200 per month and then to Rs1500 per month.”
The budgetary allocation of BISP was increased to Rs97bn in 2014-15 from Rs75bn in 2013-14.
Total expenditure of BISP during the current fiscal year is projected to cross Rs90bn. The number of BISP beneficiaries is expected to increase from 4.6m in 2013-14 to 5.0m by the end of this financial year.
BISP is expected to enroll 500,000 children in school during the current financial year under its Waseela-e-Taleem initiative. The government has increased the monthly stipend under the Waseela-e-Taleem initiative to Rs250 per month per child from Rs200.
Published in Dawn, June 5th, 2015