Comprehensive economic package is in the offing
Jan-28 - Feb-03, 2002
The United States of America is expected to
announce a comprehensive economic package for Pakistan when President
General Pervez Musharraf visits Washington next month.
The size and dimensions of the forthcoming package
aimed at offsetting the after effects of September 11 events on
Pakistan's economy. Apparently, the economy had to suffer tremendously
in all respects including drop in exports and closure of various
manufacturing units, especially small textile and leather and leather
product units in Punjab and Sindh. The large-scale export oriented
units were not exception to the recession and gone under capacity
utilization due to lack of fresh export orders.
In order to ascertain the magnitude of losses the
economy has suffered in Pakistan, the Economic Section of the US
Embassy in Islamabad had initiated a survey regarding drop in
production of the manufacturing sector to assess the impact of
September 11, 2001.
Under the survey, information is being collected
regarding overall performance of the industrial sector in terms of
output loss, increase in costs of production, fall in export orders,
increase in freight and insurance charges, use of raw material etc.
This has also been asked from the industrial sector is it bouncing
back after the initial negative effects of September 11 events?
The Economic section is also looking into
sector-wise performance in terms of production losses, decline in
exports, and increase in insurance charges on various sectors.
Situation regarding overall fall in employment in the industrial
sector and industry-wise fall in employment and the number of
establishments closed especially in the textile sector and other major
sectors has also been inquired.
Among other questions regarding impact of the
crisis, the survey also seeking projected or forecast production
levels, costs and exports for the industrial sector as whole and also
for various sectors including textile, leather, engineering and sports
for the financial year 2001-2002 and projected impact on GDP of the
Contrary to the expectations for a boom, textile
industry in Pakistan is currently facing drop in fresh orders due to
uncertainty prevailing in the buyers market in the aftermath of
September 11 incident especially in the United States.
Textile industry feels that the exercise undertaken
by the Economic Section of the US Embassy is in line with the
anticipated US package of incentives to be granted by the US
The losses to Pakistan's economy led by Afghan
crisis are estimated at $2.50 to $3 billion. Although the losses are
tremendous especially in the private sector as the people in general
suffered acute social and economic problems mainly due to stagnant
economic activity, the manufacturing sector may not be able to furnish
the exact detail as the losses are wide spread ranging from the loss
of wages of the workers to the level of finished product.
The textile industry constituting a large segment
of the total exports which comes nearly to 65 is eagerly looking for
the Package of incentives to be announced by the United States, which
is one of the major buyers of Pakistani textiles. The United States
has not announced any sort of incentives for the textile industry in
Pakistan so far. The recent announcement regarding lifting of duty on
comb yarn from Pakistan actually was a case being fought by the
textile industry and imposition of duty on comb yarn was unjustified.
Hence withdrawal of duty on comb yarn has nothing to do with the
expected package from the United States.
As a result of negotiations presently going between
Pakistan and the United States, a comprehensive package expected to be
announced shortly by the United States to offset the adverse impact on
the industry in Pakistan.
Sources said that large stock of inventories of the
textile mills is welling every day in the absence of exports and fresh
orders. The actual impact of the crisis would come to the sight in the
second half of the current year as the industry was so far engaged to
accomplish the export orders, which were already in the pipeline.
There is a marked decline in fresh orders, which is the main cause of
concern for the textile sector. Decline in the knitwear, yarn and gray
cloth is noticeable and calls for immediate solution, he said.
Commenting on the EU package of incentives given to
Pakistan, he said it would certainly result in enhancing exports from
Pakistan. However it would be too early to comment on its total impact
on our exports.
Better financial discipline on the part of present
team in government and successful rescheduling of huge foreign debt,
farmer friendly policies and above all sincerity of the purpose to
bring the economy out of crisis, has however started showing positive
results reflected in the strong signals in various sectors.
The economy is expected to grow to 3.5 per cent at
the end of the current fiscal year mostly on account of good cotton,
sugar and wheat production.
While the financial strength of the country is also
being reinforced with improved inflow of home remittances which are
estimated to cross over $2 billion at the end of the year.