Pakistan textile industry stands far away from its exports target
July 06, 2012
Textile industry constitutes lion share of Pakistan exports through its various products including finished to raw material in different global market yet it is in great trouble to support the economy through foreign exchange earnings, generation of government revenues and jobs.
The textile industry can’t fetch $ 12 billion by the end of current financial year against the target of $ 16 billion, which is impossible indeed in the scenario of energy crisis and low demand in global markets.
The country's textile exports has drastically reduced by 10 per cent during eleven months (July-May) of the outgoing financial year 2011-12 as it has recorded at $11.273 billion in period under review against $ 12.472 billion of same period last year.
According to Pakistan Bureau of Statistics (PBS), Pakistan exported textile commodities worth of $11.273 billion in July-May period of the outgoing fiscal year as compare the $12.472 billion of the same period of previous financial year 2010-11.
The textile producers collectively exported their products to earn $ 1 billion average on monthly basis though they had potential to earn $ 1.3 billion per month.
The persistent electricity and gas cut to the industry has crippled the production capacities of textile industry, which despite being export-oriented is unable to cross $1 billion a month over the last six months against traditional exports of $1.25 billion a month in the past.
To adding fuel to fire, the global economic slowdown struck Pakistan’s textiles industry once again in financial year 2011-12 following the modest recovery in the previous two years,
The consumer sentiments in US and EU remained bearish, causing a decline in textile related purchases as buyers switched to low-end products. Up till March 2012, global textile exports declined by 9.4 percent.
If it is observed in context of the 7.6 percent decline in FY09 – the worst of the global recession – the FY12 decline is indeed enormous.
Nevertheless, the decline in Pakistan’s apparel exports was modest compared with key competitors like Bangladesh, India and Turkey that also export to the EU. The garment exports from India and Turkey which entail higher value-added products faced double-digit declines.
The demand for Pakistan’s low value-added exports was less adversely affected, as consumers switched from high-price to low-price products. In the home-textile market too, the decline in Pakistan’s exports was smaller than the overall decline in EU imports.
Due to worsening debt crisis and low consumer confidence through most of the period, sales and import of textile & clothing declined sharply; most notably in France, Netherlands and Germany.
On the other hand, US imports for textiles also remained depressed throughout the period Jul-Mar FY12, with declines evident in both apparel as well as home textiles. In home textiles, Pakistan’s exports fared better compared to China, Turkey and Bangladesh.
In contrast, however, Pakistan’s garment exports to the US suffered a strong blow compared with almost all our major competitors. This was mainly because of a sharp increase in unit prices and the fact that the fall in apparel demand in the US was concentrated in cotton products.
Looking specifically at fabric exports, the entire decline is explained by the imposition of safeguard duties by Turkey effective from July 2011. Excluding Turkey, Pakistan’s fabric exports actually increased, thanks to a sharp increase in demand from Bangladesh
The shortage in energy is not allowing local manufacturers to meet delivery deadlines, which undermines the future relationship with these export markets.
Textile industrialists pinned hope that textile producers could manage to rebound country’s exports if the government supports it truly for enhancing foreign exchange.
All Pakistan Textile Mills Association (APTMA) Chairman Mohsin Aziz said a minor improvement in energy crisis could jack up exports to $1.1 to 1.3 billion per month.
A minimum of five days a week gas supply to textile industry was imperative and any move for reduction to this arrangement would definitely be detrimental to the export-oriented textile industry and last straw on camel’s back, he said.
Pakistan’s textile industry is optimistic to avail the package of European Union (EU) -- one of the biggest markets of the world—and it is willing to prove its efficiencies and varieties through exports of finished value added products.
As initial estimates, this package would increase Pakistan’s exports by approximately $150 million to $175 million per annum with major benefits expected to flow to low-end products as high end products would attract a ceiling.
The package is believed to provide a breather to falling textile exports of Pakistan, which were downed by five percent on yearly basis in December 2012, posing a positive earnings trigger for local textile sector of Pakistan, he added.
Though it is a biggest opportunity for textile industrialists to enhance their exports in EU but it seems a difficult task in the scenario of prevailing slow down in the exporting region.
However if supplies of gas and electricity is continued to leading textile companies, the exports could be revived in the industry while meeting handsome orders of the global markets.