Manufacturers in Pakistan have been pressed about the state of the country’s textile industry for some time, and in their latest effort to plead the case for improving the sector, manufacturers outlined just how much the industry has lost lately.
Though Pakistan’s textile and garment exports haven’t fallen to entirely dismal lows, the country is in a worse position today than it was in 2011 in terms of exports, according to Pakistan’s The Nation.
For the seven months from July 2016 to January 2017, total textile exports fell 1.54%, Pakistan Apparel Forum Chairman Muhammad Jawed Bilwani told The Nation.
“In the year 2010-11 (July-Jan) exports of textile were $7.45 billion while today these stand at $7.34 billion in seven months,” Bilwani said. “In fact today we are standing at a lower position than 2011 in terms of textile exports.”
The biggest of the sector’s struggles is the rising cost of production, which has risen faster than in neighboring competitor countries. The Pakistani government has reduced the electricity and gas loadshedding “to a great extent,” according to Bilwani, which has brought one of the sector’s most pressing problems at least somewhat under control. Pakistan’s electricity and gas tariffs, however, still aren’t at part with neighboring nations, which will be vital in improving the country’s competitive advantage.
Because the increasing cost of production was the biggest factor contributing to the decline of Pakistan’s textile exports, production has fallen and export-oriented companies have closed. And in the face of all of that, the announcement in January of its new trade package, which included an 8 percent duty drawback on garments (among other duty breaks), came right ahead of Heimtextil in Frankfurt, Germany, and it may serve to put Pakistan’s manufacturers in a more unfavorable position.
“We are unable to understand the objectives behind announcing export package a day before Heimtextil which prompted buyers to ask for more discounts,” Bilwani told The Nation. “Unwillingly the exporters had to give approx.. 3 percent discounts to keep the valuable buyer while on return they found the prices of yarn increased by 6 percent.”
The idea behind the new Trade Enhancement Initiative, according to Pakistan’s Prime Minister Nawaz Sharif, is that the duty discounts will help strengthen the country’s economy and create jobs, while the elimination of import duties for things like cotton and textile machinery, will also bolster the sector.
Pakistan had also put in place a rebate on yarn exports as another way to aid the sector, but Bilwani explained that it really served to help Pakistan’s international competitors get cheaper yarn than local industries.
“This will support their business and would have negative impact on local value-added industries,” Bilwani told The Nation, adding that the rebate on yarn should be extended to local sales instead of direct exports of yarn. “This will benefit not only the yarn exporters but also the local value-added products exporters.”
The Pakistan Apparel Forum is demanding the government release sales tax refunds, custom rebate claims and other cost claims textile exporters there face so that they may be able to increase their exports.