The absence of fresh orders is a cause of great
By Syed M. Aslam
Oct 15 - 21, 2001
If the external trade is any indication the
national economy has started showing signs of disarray. For a country
heavily dependent on a range of imported goods, from raw materials to
finished products, on the one hand and pressurized to increase its
exports base to narrow the incessantly uncontrolled trade deficit this
means a disturbing scenario for Pakistan which has turned into a
frontline state in US' war against 'terrorism.'
PAGE has already highlighted the
substantial increase in War Risk insurance, freight charges,
termination of operations by a number of foreign airlines and sliding
dollar enhancing the cost of Pakistani exports in the international
markets. It has also highlighted the fears expressed about the
trickling of export orders by the overseas buyers and the long term
impact it may have like foreign buyers opting to find substitutes in
the markets of many competitors in the region. The attitude of
overseas buyers is reportedly driven by the 'prevalent uncertainty'
and the concerns about the timely delivery of orders.
The outgoing President of Karachi Chamber of
Commerce & Industry (KCCI), Zubair Motiwala, said that retail
sales in the US, the single biggest trading partner, has gone down by
some 50-60 per cent after September 11. Similarly, retail sales in
second largest export destination, the EU, has also declined by 20-25
per cent during the same period. The substantial decline in retail
sales in the two major markets would definitely take a heavy toll on
Pakistani exports, he added.
He said that the Pakistan has been declared as a
war zone not so in words but rather in the increase of insurance
premiums, freight rates and termination of flights by foreign
carriers. He said that many of the shipping lines which were
previously coming into the country are no more coming into the country
to honour the commitments related to timely delivery. This in turn, he
feared has already brought export orders to a trickle and may result
not only in increased cancellation of orders but also in drying up of
He said that while the national flag carrier
Pakistan International Airlines is doing all that is possible to fill
the immense vaccum created by the termination of operations by foreign
airlines it has only a limited capacity to fill the vacuum. This is
more so as 'PIA is not customer friendly', he added. He said that the
airline Managing Director's promise to the exporters to lease a large
freighter from a CIS country has yet to be materialized a week after
it was made on the day PAGE talked to him.
Zubair, who owns a textile processing unit,
that lack of interest by the US buyers and their attempts to lessen
outsourcing from Pakistan as well as the absence of fresh orders is a
cause of great alarm for overall exports particularly cotton textiles
group which make up 65 per cent of the total exports from the country.
As is, he disclosed that a major textile unit, Afroze, has laid off
1,200 workers while another unit, Al Munaf has laid some 400 workers.
The tricking of export orders has also resulted in the shutting down
of design department at Diamond Textile, the textile processing unit
owned by Zubair.
Asked what kind of adverse effect the prevalent
situation would have on exports in terms of value, Zubair expressed
fear that it would cost the country anywhere between $ 1.5 billion to
$ 2 billion during the current fiscal ending June 30 next year. 'And
it would a disaster if the situation developed after the US attacks on
He said that the US government should play a vital
role to persuade its importers not to find a replacement to outsource
their goods as increasing the social problems would mean more unrest
in the region.
He said that the KCCI has presented four demands to
US to help the local exporters. Number one, instead of rescheduling
the debts Pakistan should be allowed a 30-year interest-free
moratorium. Secondly, Pakistan should be allowed market access to the
US like many other countries it wants to help. This means that there
should be no quota and no duty on textile exports from Pakistan unlike
at present — there is a 17 per cent duty on textiles from Pakistan
compared to concessionary duty of 7 per cent on Bangladesh and zero
rate of duty and no quota on Jordan. Thirdly, the US government should
launch a drive to undo an environment of hatred created by vested
interests comprising enemies of Pakistan not to buy made-in-Pakistan
logo. Fourthly, free travelling should be allowed between the two
He said that the prevalent situation has also taken
a toll on imports due to the drying up of the local markets as people
inclined to buy only the necessities to save money for fear of hard
times. He said that the imports have also registered a substantial
decline of 11 per cent since Sept. 11.
Meanwhile, the former chairman of Insurance
Association of Pakistan, M.I. Ansari, told PAGE that the
foreign reinsurers are declining to provide the Political/Terrorist
cover 'at any cost.' It may be mentioned that this particular risk has
always remained the part of all marine insurance previously. He said
that the refusal on the part of international reinsurers pose a real
challenge not only for the local insurance industry but also for the
external trade. The IAP, he disclosed has called a meeting on the 15th
of this month to discuss the situation.