Barriers in the textile exports
about three dozen top groups, textiles still offers a lot of
business prospects despite difficulties. But for many
industrialists and traders, textile has become a losing
proposition as they have either closed down or are about to
shut their shops.
“Textile landscape is now littered with dead and dying
units’’, Adil Maehmood, Chairman of All Pakistan Textiles
Association (APTA), the breakaway group of APTMA said over
telephone from Lahore.
“I see good business till June next but beyond summer right
up to autumn and winter there is a big question mark,’’
Iqbal Ibrahim, Chairman of All Pakistan Textile Mills
Association (APTMA) told Dawn EBR. He represents one of the
top textile groups.
As he explained, he was able to get good export orders last
autumn which he is servicing now in winter. ‘’Of course,
there are many problems and challenges’’ he said pointing
out that cotton availability remains a major issue for him.
But the main problem Iqbal Ibrahim now faces is that his
buyers are reluctant to book orders for next autumn and
winter on fears of delayed supplies because of what they
apprehend turmoil and troubles in the days ahead.
‘’I am shipping textile products for which the buyers issued
purchase orders,’’ he said. For next autumn and winter, the
buyers do indicate to place orders but with the instructions
to hold on till the situation for them becomes clear in the
Almost all of the top groups have a well-laid network of
marketing and information gathering infrastructure in Europe
and USA. They have also ware housing facilities abroad. They
enjoy tremendous clout with the government so much so that
‘’15 textile mills in Punjab belonging to a few of these big
groups managed to get their gas supply resumed when it is
being denied to more than 150 textile mills’’ alleges Adil
Mehmood. He broke away from APTMA on the plea that interest
of small textile businessmen was being ignored.
At least 108 mills were reported to have been closed down
because of energy crisis. But with all this clout and
influence at home, the top groups are not in a position to
persuade their foreign buyers to visit Pakistan or convince
them that the supplies against their orders will be
transported and delivered on time.
Like many other businesses, textiles too is groaning under
the impact of severe energy crisis, particularly in Punjab
and in the North; high financial cost jacked up further by
recent monetary policy has pushed up interest rate to 13 per
cent on bank loans. And the drop in cotton crop has forced
mills to import over three million bales and, of course,
there is the law and order problem.
A series of bomb blasts in January and growing incidents of
lawlessness is keeping foreigners away from Pakistan. On
Thursday evening, Shabbir Ahmad a leading exporter of home
textiles left for Mumbai to meet his buyers from European
countries. Market reports suggest that local businessmen are
meeting their foreign partners either in Europe, USA, Dubai,
Hong Kong or some other places.
While hit by a negative image, many textile exporters are
convinced that they could have made good money in western
markets despite reports of recession setting in there.
“China has cut down on many cash incentives of its textile
exporters’’ owner of a textile mill said while quoting an
American newspaper article which revealed that Chinese
textile products are now relatively more expensive in the US
market. Indian currency too has appreciated from Rs44 a
dollar in May last year to Rs38 a dollar recently.
But when these golden opportunities of getting easy access
to USA and European markets looked within reach, the cotton
crop failed to yield projected 15 million bales. With
promulgation of state of emergency on November 3 in Pakistan
and subsequent follow up harsh administrative actions
created feelings of political uncertainty. But the worst
came in end of December, when Benazir was killed and for
three days the upcountry remained cut off from Karachi port.
This shattered the confidence of foreign buyers who now fear
more bad days ahead. The top business groups took advantage
of the situation in summer and autumn when Indian currency
value appreciated and Chinese discontinued incentives to
their exporters. They managed to secure good amount of
export orders. Textile export maintained a sluggish growth
from July to October. But from November the trend reversed
to marginally negative that became more pronounced in
Textile and garments export fetched only $894 million in
November which came down to $746 million in December. Total
textile exports in July-December 2007-08 amounted to $5.25
billion. ‘’We hope some improvement in January export’’ a
senior official said over telephone from Islamabad. He is
confident that textile export will pick up in February and
in next four months net in a total of 12 billion dollars
projected export earnings for fiscal year 07-08.
“We will consider ourselves fortunate if we end up with $11
billion export earnings this year’’ a Karachi exporter said.
Exporters have pinned their hopes on the coming elected
government. “We can work out a short and long- term
strategy’’ with the future decision makers.
Textile industry leaders are convinced that their problems
can be best solved if the government addresses industry as a
whole. The government has to set in place a reliable
infrastructure for the industry within shortest possible
time. They also complaint that government’s insistence on
poverty reduction and improvement of per capita income to
1,000 dollars has denied textile exporters many incentives
of access to the EU and the US market. “Bangladesh exports
more than $8 billion of textiles to US and Europe because it
enjoys duty free access to the markets being a low income
country. Pakistan is clubbed in middle income group and
hence subjected to duties in EU and US.
‘’Pakistan is still a poor country with a very low per
capita purchasing capacity’’ argues a businessman. His
prescription is that the government should draw a strategy
to generate employment in industry and agriculture, improve
incomes, and expand domestic market and then create trade
surpluses for export growth.
Courtesy: The DAWN