Tex­tile ex­ports

The Pak Banker - - FRONT PAGE -

The good news is that tex­tile ex­ports in FY18 wit­nessed a rise of 9 per­cent as com­pared to the pre­vi­ous year. Ac­cord­ing to avail­able fig­ures, the growth in ex­ports was led by val­ued added seg­ments in­clud­ing bed­wear, knitwear and ready­made gar­ments with the lat­ter two record­ing dou­ble digit growth. This is a good sign and au­gurs well for the fu­ture. How­ever, on a month-on-month ba­sis over­all tex­tile ex­ports saw a fall of two per­cent which might be at­trib­ut­able to a cou­ple of fac­tors. Al­though the much awaited de­pre­ci­a­tion of the ru­pee has taken place, it is not known where the slide will fi­nally stop. In this sce­nario, ex­porters are likely to de­lay trans­ac­tions in or­der to profit from fur­ther ex­pected cur­rency de­val­u­a­tion. This is a neg­a­tive el­e­ment in the sit­u­a­tion which works against the max­i­miza­tion of our ex­ports.

In the over­all con­text, the rise in tex­tile ex­ports is not un­ex­pected. There were high hopes pinned on value-added seg­ments to im­prove the dis­mal per­for­mance of past years in light of the wide range of in­cen­tives pro­vided under the PM Tex­tile In­cen­tive Pack­age. But tex­tile stake­hold­ers across the board have ex­pressed dis­ap­point­ment over­the faulty im­ple­men­ta­tion of the ex­port in­cen­tive awarded to the tex­tile sec­tor by the gov­ern­ment.Value-added play­ers as­sert that the growth would have been much higher had their pend­ing sales tax re­funds which have now been de­layed for over two years now in some cases been re­leased in a timely man­ner.

In­dus­try in­sid­ers are of the opin­ion that in the days ahead the en­vi­ron­ment for tex­tile ex­porters and man­u­fac­tur­ers will re­main under pressure ow­ing to a va­ri­ety of rea­sons. The cost of man­u­fac­tur­ing in re­la­tion to our re­gional peers is set to rise as the gov­ern­ment is likely to in­crease both elec­tric­ity and gas tar­iffs. The pro­vi­sion of more ex­pen­sive R-LNG to Pun­jab's in­dus­try has al­ready re­sulted in clo­sure of sev­eral units ow­ing to high cost of op­er­a­tions.More­over, raw material pro­cure­ment has be­come te­dious and costly. In this con­text two in­hibit­ing fac­tors are the il­log­i­cal pro­tec­tion af­forded to polyester play­ers and the re-im­po­si­tion of duty on im­ported cot­ton. These have put a drag on tex­tile ex­port mo­men­tum.

Tex­tile in­dus­try also faces an­other prob­lem - short­age of raw material. The area under cul­ti­va­tion of lo­cal cot­ton has gone down and the cot­ton pro­duc­tion tar­get was missed by eight per­cent in FY18 while by an even wider mar­gin of 30 per­cent and 25 per­cent in FY16 and FY17 re­spec­tively. The cur­rent year is likely to be no dif­fer­ent when it comes to a short­fall of the re­quired 16-17 mil­lion bales by the lo­cal in­dus­try.Need­less to say, Pak­istan's tex­tile ex­port drive would need con­certed ef­forts from both pri­vate sec­tor play­ers and the gov­ern­ment in or­der to build any kind of mo­men­tum to push our­sales abroad by a de­cent mar­gin in the com­ing years.

The pri­vate sec­tor spe­cially needs to pay at­ten­tion to the evolv­ing pref­er­ences of global con­sumers in fa­vor of man-made fibers, while ca­pac­ity would have to be in­creased in or­der to re­main cost com­pet­i­tive with Viet­namese, Bangladeshi and Chi­nese ex­porters.From the gov­ern­ment's side, the pend­ing sales tax re­funds should be cleared soon and pol­i­cy­mak­ers should re­frain from im­pos­ing du­ties on key raw material items for the sake of rev­enue gen­er­a­tion. No less im­por­tant, pro­tec­tion should be with­drawn from those up­stream in­dus­tries that have failed to be­come in­ter­na­tion­ally com­pet­i­tive af­ter decades and still re­quire pro­tec­tion to re­main afloat in the lo­cal mar­ket. This only hurts the down­stream value added seg­ments and­ham­pers their smooth work­ing.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.