Federal budget 2009 & textile sector

Federal budget 2009 & textile sector

Introduction

Pakistan is the 4th largest cotton producer and 3rd largest cotton consumer. The textile and clothing industry has been the main driver of the export based industry for the last 50 years in terms of foreign currency earnings and jobs creation.

Textile Industry has made an investment of about 7.5 billion US$ during the last ten years (1999-2009). China, India and Bangladesh are posing tough challenge by virtue of their competitiveness.

What comprise its cost & revenue?

Cost is determined by

Raw material

Labour

Factory overhead ( mainly energy)

All other cost

Revenue is determined by whatever sale is made.

It has two markets to sale.

Local sale

Export sale

IMPORTANT QUESTIONS ARE

How textile industry will grow ( 2008 2.6 2009 -.7)

How to enhance its exports

How to increase foreign exchange reserves

How to create employment opportunities in the country

How to lower cost of doing business in pakistan to cater foreign investment

Demands from textile industry

Immediate financial relief

Special treatment on energy ( gas & electricity)

Market access

Federal budget 2009

A) "The government is managing the affairs of our country within a strategic policy framework expressed in its Nine Point Agenda of economic and socialrecovery. I take this opportunity to highlight these nine pillars:

I. Macroeconomic Stability and Real Sector Growth.

II. Protecting the Poor and the Vulnerable.

III. Increasing Productivity and Value Addition in Agriculture.

IV. Making Industry Internationally Competitive.

V. Capital and Finance for Development.

VI. Removing Infrastructure Bottlenecks through Public Private Partnerships.

VII. Integrated Energy Development Programme.

VIII. Human Capital Development for the 21st Century.

IX. Governance for a Just and Fair System."

"SOURCE BUDGET SPEECH FOR FISCAL YEAR 2009-10 "

B) Some of the textile circles feared that the federal budget would prove last nail in manufacturing sector's coffin, as the budget lacks a booster for growth of manufacturing sector, guaranteeing job creation over the last four decades.

C) The State Minister for Finance & Revenue Hina Rabbani Khar did not explained in her budget speech as to how the government was going to revive the industrial sector, particularly textile industry, which contributes 67 per cent to the country’s total exports

D) With a view to moving industry towards consolidation and value addition an Export Investment Support Fund, worth Rs. 40 billion has been proposed for FY 2009-10. The government will contribute Rs 10 billion towards this fund; another Rs 10 billion would be contributed by the Export Development Fund; balance Rs 20 billion would be contributed by governmental agencies through mopping up of surpluses in commercial banks.

"SOURCE BUDGET SPEECH FOR FISCAL YEAR 2009-10 "

The announcement of Rs 40 billion as industrial support fund does not clarify that what is being earmarked for which sector.????

E) 'The government proposes to declare fiscal 2009/10 as the year of industrial recovery.'

But it spreads disappointment simultaneously by missing the measures to bring the textile industry out of woe.

Federal budget 2009- 2010 of Pakistan

Federal budget 2009- 2010 of Pakistans

To know & download Federal budget 2009- 2010 of Pakistans .
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Economic Survey of Pakistan 2009

Economic Survey of Pakistan 2009

To know & download
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IAS-2 Inventories ( Measurement of cost)

IAS-2 Inventories (Accounting treatment)

Inventories shall be measured at the lower of cost and net realisable value.

Net realisable value is the:

estimated selling price in the ordinary course of business
less
the estimated costs of completion and
the estimated costs necessary to make the sale.

The cost of inventories shall comprise all :

costs of purchase,

costs of conversion and

other costs incurred in bringing the inventories to their present location and condition.

Inventory cost should not include:

abnormal waste

storage costs

administrative overheads unrelated to production

selling costs

foreign exchange differences arising directly on the recent acquisition of inventories invoiced in a foreign currency

interest cost when inventories are purchased with deferred settlement terms.

Illustration 1

ABC ltd record shows the following data regarding abc material.

Invoice value of $ 1,000 ( Net of Trade discount $ 2)

Freight $5

Storage cost $ 1

Compute the cost of material to be recognised as per IAS -2

Solution:

Cost of material:

costs of purchase $ 1,000 + Freight $5 = $ 1,005

Storage cost is not included as per IAS-2

costs of purchase (including taxes, transport, and handling) net of trade discounts received.

Standard cost & retail method

The standard cost and retail methods may be used for the measurement of cost, provided that the results approximate actual cost.

Specific costs.

For inventory items that are not interchangeable, specific costs are attributed to the specific individual items of inventory.

For items that are interchangeable:

IAS 2 allows the FIFO or weighted average cost formulas.

(Fifo & weighted average illustration as per above.)

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