The Ministry of Commerce was also involved in the discussion about the cotton yarn price increase rates between global and domestic markets as issue was raised between representatives of ready-made clothing manufacturers and yarn manufacturers. Minister of Trade Mehmet Muş reached Mustafa Gültepe met with the President of Istanbul Ready-made Clothing and Apparel Exporters' Associations (İHKİB), and Ahmet Öksüz, President of Istanbul Textile and Raw Materials Exporters' Associations (İTHİB) within the scope of the joint discussion with the two industry representatives regarding the issue we raised in a month ago. During the meeting, the ministry shared the following, “Your rooms are opposite each other. You should solve this case by yourselves.”
Elimination of additional customs duty is on the Agenda
At the meeting participated by Turkish Exporters Assembly (TIM) President İsmail Gülle and the chairman of the industry exporters' associations and industrialists, Minister Muş instructed them about the inspection on cotton yarn trade for a month and mentioned about the price movements expected to become reality in cotton if not sitting on a resolution amongst ministries and in consistent with this changing trend foreseeing expectations set around to waive additional customs duties in range between 5 to 8 percent.
Yarn Prices are 20% more than overseas
Ready-made clothing industry representatives sharing the opinion about the cotton yarn prices for quite a long time by setting as an example of cotton yarn prices both in Turkey and in overseas by comparing its price difference and by highlighting 20 per cent increase in Turkish market and further informed about the problems associated with delivery and logistics in domestic markets and shared concerns about the moving demand to Turkish market blocking fair competition. Lastly, 5 of the exporters' unions and 13 of the industry associations, consisting of industry representatives, held a joint press conference to raise their concerns.
In a year prior, ready-made clothing manufacturers reported that cotton yarn price have risen by 50% in the world and by 90% in Turkey. While stating the reasons about this price increase, concerns about the rising cotton yarn prices 0.80-1 dollar higher than international markets and falling behind of competitive power in global markets with this price difference were all taken into the case. Besides, while mentioning about the supply problems ,manufacturers said the following on behalf of the industry, ‘’Once accessing raw material in between 2-3 weeks now experiencing delays around 4-5 weeks and losing our products more to exports.’’
Value added Goods should be exported
President of İHKİB, Mustafa Gültepe, said, “In exports, while we see that a kilo of fiber can be marketed around 2 dollars, yarn can be exported around 4 dollars and fabrics can be around 6-7 dollars; and if these products converted to ready-made clothing prices may be skyrocketed to 16-17 dollars.’’ İHKİB November figures indicated that cotton yarn exports controlling 33.8% of total yarn exports, with an increase in between January-November by 107% in comparison to the same period of the previous year by valuing at 819 million dollars. Also, cotton fiber exports also increased by 95.8% in the same period by valuing at 353 million dollar.''
“Our expectation set around the elimination of added taxes’’
While continuing his wording, Mustafa Gültepe said, ‘We shared our report about the subject and stated our reasoning. Although cotton prices in international market have experienced somewhat a reduction at the moment, 20% price difference should not be the case. Minister Mehmet Muş advised about resolving the issue by ourselves and also called an action to reduce high prices. To ensure about the recovery, export activities of these products and domestic market movements should be in a closer control for a month. Next month will be decisive since results will be obtained. Union presidents and other representatives assured about their utmost contribution to the issue. They all will check whether recovery will have been the reality. Our expectations set around reduction of added taxes or awaiting a decision to hold them on temporarily.’’
“High-Quality Cotton Yarn Produced in Turkey”
İTHİB President Ahmet Öksüz said that Turkey is not capable of exporting yarn cheaper that all have been submitted in invoices and agreements in the evaluation meeting; ‘’In this subject, yarn representatives are ready for any opposition.’’ said Öksüz and continued his speech as follows, ‘’Cotton prices in global markets have caused an increase. Besides, dyeing, chemical materials and energy costs have risen. Labor wages will also rise in New Year. A harming price increase has been a reality that also affects product prices. Of course, we do not want this happen.’’ In his speech, Öksüz said the following about the price difference and said the following, ’In cotton yarn 20% does not make it more expensive. If it was, export to Turkish market would not be possible. World markets never take on that. Indian prices are coming to our concern. As known, these yarns have the lowest quality adding that we cannot compare Indian yarn prices with Turkish yarn prices. Also, Turkish yarn industrialists make use of cotton 10% higher than global markets. We cannot disregard this reality as well. Cotton prices in Turkey are in parallel with the world. You may favor quality in some instances that reflected in prices around 5% but not 20% difference.
“Tax-free Yarn Can be purchased with inward processing regime’’
Inward Processing Regime (DIR) saves tax burden. What we offered; confectionary could not access to direct yarn within the scope of DIR because they do not own fabric mill or facility. What we asked to join in cooperation with fabric manufacturers and bringing in yarn within scope of DİR without paying taxes and in this way ease of their exports and to cover these documentation. We received great appreciation. To working on these and to find right instruments are essential.’’ Also, while giving facts about the taxes on yarn that are the lowest in comparison to the 20% on fabric and 30% added taxes in confectionery , Öksüz said, ‘’The least concerned industry in Turkey. Therefore, we should keep on looking after it. People make their investment due to their trust. We increase capacity by 20%. Also, elimination of taxes in this period is not something we favor for the confectionery industry. As now we do not have yarn, all mills are working at full capacity without any delay.’’
“We do not accept the high price difference”
Şeref Fayat, President of TOBB Ready-to-Wear and Apparel Sector Assembly, one of the figures who attended the evaluation meeting, said that 20% difference in raw materials is not ethic especially in a period in which customers are putting pressure about prices that filed in report to Minister Mehmet Muş in report. Fayat said, “While we access Indian cotton for 5 dollars, here it cost 6 dollars. Since our cotton is better in comparison to Indian or Pakistani, price increase at around 5-10 per cent would not be an issue but 20% price difference is very high for us. It would be manageable if we could lower added taxes by half. We mentioned about all of it. It was useful meeting. Both sides have presented their reasoning. We also proved that these prices have had a negative impact on our profitability. We now have a month. Either both sides of union heads will find a common platform amongst themselves to settle on a resolution or we will lose our connection by the end of a month period and the decision will be made in consistent with the results. We hope that lowering price difference or taxes by half will become an insightful decision.’’
