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Pakistan Textile Exports Fall to Alarming Lows

Pakistan has been trying to play catch up as its ready-made garment exports continue to shrink, but the gap between its sector and competitors’ is widening to potentially detrimental levels.

The South Asian nation’s textile exports fell 10.63% to $1.05 billion in October, compared to $1.176 billion in the same month last year, according to data from the Pakistan Bureau of Statistics. For ready-made garments specifically, exports fell by 0.36% year over year in October.

Add to that rising import costs and Pakistan is seeing no signs of coming positive growth for its garment sector. Not even the Generalized System of Preferences facility with the European Union that took effect at the start of 2014 has boosted exports to expected levels.

Pakistan’s total exports to the EU fell by more than 15 percent to $4.237 billion from January to August this year, while the first year of the GSP scheme fueled a 20 percent increase in exports.

The country is losing share in the global market for garments.

Since 2013, according to Pakistan’s The Express Tribune, the country’s share of textile exports decreased from 2.2% to 1.8% while Bangladesh’s share rose from 1.9% to 3.3% in the same period, China’s share swelled to 37 percent from 27 percent and India saw an improvement to 4.7% from 3.4%.

Commodity costs are killing the country’s competitiveness, too. The imposition of a Gas Infrastructure Development Cess has made the cost of the commodity $6.7 per million British thermal units (mmbtu) while neighboring India pays a lower $4.2 per mmbtu and Bangladesh buys gas at $3.1 mmbtu. Pakistan’s electricity tariffs are also the region’s highest, ringing in as much as twice that of India.

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Stakeholders in Pakistan have implored the government to intervene—combat energy shortages, high utility prices and cut the newly doubled 10 percent import tax on cotton yarn—but little has yet been done and manufacturers there are concerned for the sector’s stability.

Pakistan Apparel Forum chairman Jawed Bilwani told the Tribune he is sure the country’s textile exports will fall further. “The government knows everything about the international and domestic challenges of the textile industry and yet is not doing anything,” he said.

Tariq Saud, chairman of the All Pakistan Textile Mills Association (Aptma), chimed in, “It is not lack of innovation, it is the cost of doing business that has resulted in the decline in exports. Pakistan lagged behind in the region mainly because of its own domestic problems.”

Pakistan’s government has made little effort so far to correct the downward export trend and experts expect further declines in the future.

“Textile exports will continue to fall in coming months once the religious celebrations in West comes to an end,” Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) Ijaz Khokar told Business Recorder. “Textile exports in November-December 2015 will decline and do not reflect on the national manufacturing potential.”