Dec 7 - 13, 2009

The high cost of production and electricity and gas load shedding are not only creating more and more difficulties for exporters but also rendering our products uncompetitive in the international markets.

Country's export already fell short of its target in the first four months of current financial year 2009-10 raising many questions as to whether or not export target set for the current fiscal year would be achieved.

In July-October 2009-10, as per statistics export stood at $6.088 billion against its target of $6.313 billion, falling by 3.70 percent against the target. In July, export came to $1.489 billion against target of $1.646 billion, just achieving 90.5 percent of the target. In August, export totaled $1.483 billion against the target of $1.587 billion, meeting 93.4 percent of the target and in September. It stood at $1.521 billion against the target $1.637 billion, meeting almost 93 percent of the target. In the month of October, against the target of $1.443 billion, exports of $1.595 billion were made.

According to the exporters, high price of Pakistani products are pushing them out of the competition and badly affecting the local export oriented units. The setting of a high target is not just enough, but preparation of a level playing field for the export sector is the responsibility of the government, an exporter said.

It may be noted that the Trade Policy 2009-12 announced by the ministry of commerce aims at keeping exports target at lower side with $18.86 billion against the actual target of $22.1 billion in last fiscal year 2008-09, showing a reduction in target by 14.66 percent.

The textile exports, which constitute around 60 percent of total exports, are finding it difficult to achieve the set targets due to a number of reasons.

The ministry of textile industry has already expressed concerns over the rising cotton and cotton yarn prices. The prices of raw cotton increased 8 percent during last two months. At present, cotton price stands at Rs 3,700 per maund as compared to Rs 3,400 per maund in August. In addition, average price of yarn increased about 20 percent.

High prices of yarn have a serious effect on the exports of the textile sector and have led to decline in exports of the value-added apparels and made it difficult to achieve export target, apparel sector exporters said. According to them, massive export orders and rising demand in the domestic as well as international markets has pushed the prices of commodity in local market, creating several problems for apparel and home textile exporters.

"Value-added apparel exports including readymade garments and hosiery and knitwear are facing serious decline because of unrestricted export of cotton and cotton yarn," they said and added while the exports of the raw cotton and cotton yarn is on surge the value-added apparel sector is converting raw cotton of 67 cent a pound into value added goods worth 5 to 6 dollars a piece, earning valuable foreign exchange for the country.

At present it is evident that exports of raw cotton and semi-finished textiles products are increasing considerably while exports of apparel sector and home textile are declining, which is indeed alarming. Cotton yarn and yarn exports have increased by 30 and 37 percent respectively during the first quarter of current fiscal year (2009-10).

Exports of readymade garments, hosiery, towel and bed wear have declined 14 percent, 2 percent, 7 percent, and 12 percent respectively in first three months of current fiscal year.

Rice Exporters Association of Pakistan (REAP) is optimistic that the rice export of the country is likely to surpass the target of $2.5 billion set for the current fiscal year 2009-10.

It may be mentioned that the TDAP and REAP agreed to work out a joint strategy for achieving export target of 4 million tonnes of rice.

During first four months of the current fiscal year 912,487 metric tonnes non-basmati rice worth $35.59 million has been exported while basmati rice worth $30.64 million has also been exported to different countries. "Our estimate suggests that hopefully we will end the season by exporting more than $2.5 billion worth of rice," spokesperson of REAP said.

Further, the State Bank of Pakistan has already allowed rice exporters one-time facility of getting financing up to 100 percent instead of 85 percent of the value of firm export order in order to facilitate domestic rice procurement process for exporters and extended repayment period to 270 days from 180 days.