TEXTILE EXPORTS OF $5.52 BN IN MID FISCAL YEAR
VALUE ADDITION TO ACHIEVE YEAR-END TARGET
TARIQ AHMED SAEEDI (firstname.lastname@example.org)
Feb 18 - 24, 2008
Growth of textile and garments industry, which has been the mainstay of the national economy, hit the snag for enumerable reasons. Apart from its great contribution in manufacturing and thus in gross national products and in increasing employability of the population, textile and garments industry has been enjoying the competitive advantage in relation to balance of trade in international market. The group of textile and garments and its derivatives holds the biggest share of manufacturing in the country as well as in exports, contributing 10.5 percent to GDP, 68 percent to exports and employing over 38 percent of all industrial workers. In recent past, exports of the industry to compatible USA and EU market have significantly scaled down. While, in November this fiscal year 2007-08, textile and garments exports stood at $894 million, the figure decreased to $746 million in the month of December. Collectively, the total exports figure for July-December 2007-08 was $5.52 billion. In addition to this, government projected to achieve the export target, set for the textile industry, of over $12 billion at fiscal year end. That how this target would be attainable in the wake of crisis like situation for the industry is logical question. It is said that law and order situation has shattered the confidence of foreign buyers, who avoid coming to Pakistan for export orders.
Until buyers visit on location, the impression is less likely to be made, said Muhammad Azam, Chief Operating Officer, All Pakistan Textile Mills Association. While talking to this scribe, he said satisfaction of foreign buyers correlates to his complacency over processing of orders execution. They prefer to visit order processing site in order to verify if pre-defined international standards are followed properly. And, the visit is often necessary for manufacturers as well to fetch profitable purchasing orders, he underlined. Unfortunately, issuance of travel advisories is greatly hampering the prospective earnings in foreign reserves. The crisis is worsened by the outage of gas to industries, shortage of cotton, and confusion about the policies of the next government setup. Industrialists believe that gas outage has already increased overheads, ballooning cost of realizing orders. Gas outage has compelled industries to shut down its several units across the country. If not because of this reason, government's lack lustre response to the demands of the local industrialists is feared to pull investments out of the industry. Even, one of the main association of textile manufacturers of the country intimated clearly in a report to stop further investment in the textile industry if present problems persist on and are not resolved at once.
COST OF DOING BUSINESS
Creating an equal impact is reportedly the shortage of cotton. This is certain that consumption of cotton in industry exceeds well over the local production. Despite claim of bumper crops in current season, mills had to import cotton mainly from USA and Australia to meet their production needs. This was beside what they have to import [fine cotton] from USA, for instance, to fulfil the requirements of foreign buyers, informed Azam. It is not like that Pakistan can not produce fine cotton but in fact locally produced cotton sometimes are incapacitated to make fabric, required by the buyers, he clarified. Adding insult to the injury was the reduction of yield per cotton in all farmlands nationwide. The country's cotton yield per acre has been highest in the world in past. Excessive exploiting on seasonal terms of same field for cotton and sugarcane reduces the fertility of the land and affects on the quality of crops, he opined. Other major constraints and challenges recognized are contamination of cotton due to improper picking and storage; low technology base and outdated machinery used in the ginning sector, which needs immediate restructuring and modernisation; and so on and so forth. Above all, updated technology has neither been used in our spinning sector, leaving its performance way behind in international arena.
Although Pakistan's textile export industry in the post-quota regime has undergone a major transformation with billions of dollars investment in downstream and upstream sectors, value addition in local produce has yet to be realized with its full potential. Only value addition could quadruple the present export figure. The local made machineries do not have capacity to keep textile production at par with foreign standards. Therefore, such sophisticated equipments are to be imported from abroad, marring the cost effectiveness of final products. Local manufacturers need to sideline a heavy budget for the procurements. Other countries have developed efficient infrastructure to curtail the unnecessary costs by virtue of self reliance. For example, China is making its mark in textile goods export because of its minimum dependence on imports. It utilizes domestic resources at its optimal. Its low priced and high quality textile goods are penetrating rapidly in global market due to the diversification. It designs products according to market requirement and buying power of customers. Implementation of free trade constitution on international trade has increased the responsibility of producers, strategizing for designing best products to capture market share. The regime, however, lifted trade barriers and prevented unfair levy of tariff [barriers] on international trade transactions, non-tariff barriers remain intact, which are the major challenges to textile and garments exports. Non-tariff barriers such as social and environmental compliance often jeopardize the trade accord with the importing countries like EU and USA, which are impulsively conscious of standardizations. Out of vindictive action, often, non-tariff barriers are activated against country's textile exports. Local millers have to import high quality dyes and chemicals from different countries. The dyes, chemicals, and other stuff are subject to certain custom duties. Hence, non-compliance charge may be indicted against local exports in retaliation of custom duties on imports. Therefore, government should figure out if anything like this might be obstructing the exports of textile goods. Research and development funds to textile companies would enhance the buoyancy of the local industry. However, government offers tax incentives and rebates to companies investing on research and development progress in sustainable economy has not yet been surfaced. Research and development can not be carried forward in isolation but collaborative and institutional efforts are needed to have desirable outcomes.