TEXTILE EXPORTS ON THE INCREASE?

Textile exports likely to hit the mark of $8 billion this year

By AMANULLAH BASHAR
Mar 08 - 14, 2004

Despite all hue and cries over increase in cotton and cotton yarn prices within the local market, the overall performance of the textile exports are encouraging and likely to hit the mark of $8 billion at the end of the current financial year in June this year.

Pakistan's volume of textile exports remained hovering around $5 billion for many years which became a psychological barrier in the textile industry. For the first time, the textile industry managed to break the psychological barrier by adding around $2 billion dollars in the year 2002-03 by reaching around $7 billion. Although some quarters were expressing concerns that the industry may not be able to retain its last years performance because of different reasons including reported shortfall in the cotton crop, increasing international and local prices of cotton yarn and to some extent change behavior of the European Union towards Pakistani products. Despite all these concerns, it is estimated that the textile industry continued to march towards a new height and is expected to register an increase of 37 percent over the total exports of previous year, it is learnt.

The increase in cost of production because of increasing cotton and cotton yarn prices were overcome by increase in the unit prices as the exports got at least 10 percent increase in their unit prices which help not only in off setting the increase in cost of production but also helped overall increase in terms of value.

A certain group of critics in the textile business, however, expressed their concerns that the honey moon of the textile industry is likely to over next year with the abolition of quota regime from January next when opening of the doors under WTO regime would lead to tremendous competition among the textile producing countries.

As far as Pakistan's textile industry was concerned, so far only 10 percent top textile exporters were prepared for the World Trade Organization regime, said Tariq Ikram, Minister of State and the Chairman of Export Promotion Bureau (EPB) at a conference recently.

On the part of the government, the EPB Chairman said, it has already covered almost all the required areas to facilitate the trade under WTO regime. There would require no reduction in customs duty for the WTO as the government had already reduced it to a level where only rationalization would be required. Unlike other countries in the region including India and China, there is no issue of subsidies in Pakistan and most of the subsidies have already been withdrawn in almost all the economic areas of the country, hence no major change is required on the regulator side by the government.

It is now qualitative competitiveness of the products which would help the exporters to remain in the export business.

Despite all these claims by the Chairman EPB, the government has yet to play a much bigger role especially in providing even play field to the export-oriented industry. So far, the industry in Pakistan was managing to compete in the international market mainly under cover of the quota protection.

Besides quality of the product, the price of the product would play a key role in finding a play in the world market. To bring down the price level, the industry would be in need of inputs at affordable price such as electricity which is highly sold at the highest rates in the region. In certain export oriented industries, the electricity is used as the basic raw material, there is no second opinion that with the current level of electricity price, it would be hoping against the hope to grab the market share by producing goods at such a higher rate of electricity. Hence the first and the foremost requirement would be to bring down electricity prices at least to the level of other countries in the region. In fact the price of electricity is higher because the government has started using the utility companies as revenue collecting agencies. Certain government levies would have to be withdrawn if the government really desires to give relief to the end users and to keep up the pace of economic growth in the country.

The EPB Chairman has, however, suggested to the textile industry especially to the garment manufacturers to shift from the men's garments to those of women and children. Broadly speaking, the EPB Chief has right pointed out for a change in production range, yet the most important thing to meet the two ends is to make efforts to go enhance the volume of production at a massive scale to reach at economy of the scale. It is the massive scale of production which really proves cost effective and face the competition in terms of price of the unit. Another important area is the concentrate on value addition through match the demand in fashion designing. The Export Promotion Bureau has already launch a scheme for hiring world class consultants for improving production, marketing and also to acquiring brand names of international repute. It is certainly a right approach and if the local industry succeeded in acquire some popular brand names, the textile industry in Pakistan could enhance its export to a much greater height in the days to come.