PROSPECTS OF ACHIEVING EXPORT TARGET BLEAK

INBOX: IF OVERSEAS BUYERS ARE RELUCTANT IN COMING TO PAKISTAN EXPORTERS SHOULD VISIT THEM MORE FREQUENTLY

SHABBIR H. KAZMI
Mar 9 - 15, 2009

There is growing concern among the players and the analysts that Pakistan may not succeed in achieving the export target fixed for the current financial year. As against a full year export target of US$ 22.10 billion, the country earned US$ 10.54 during July-December 2008 period, one billion dollars less than the target for half year. Analysts are of the view that unless Pakistan achieves more than US$ 2.5 billion monthly export proceeds in the remaining months achieving the target would remain difficult. Therefore, it is necessary to examine the opportunities and threats to come up with prudent policies.

PROBABILITY TO MISS THE COTTON PRODUCTION TARGETS

It seems most likely that Pakistan would miss cotton production target for the fourth consecutive year. It is also the unanimous view of the people involved in textiles and clothing business. Cotton arrivals show that the country would miss the 14.11 million bales target set by the government by a wide margin of 2 million bales at least. Until March 1, 2009, Punjab produced 8.23 million bales while Sindh provided 2.98 million bales to get 11.2 million bales.

There are two opinions first that country will have to meet the shortfall by importing raw cotton and the second that due to slowdown in export of textiles and clothing the spinners may not need to import cotton at all. In case the country has to import cotton, it will be a burden on already depleting foreign exchange reserves. Part of it may be recovered through export of textiles and clothing. However, the consensus is that Pakistan may not succeed in maintaining its share in the global textile markets.

Cotton experts attribute the short fall in crop to wrong assessment by the government. Normally at the beginning there is optimism, that there would be bumper crop but as the time passes this optimism turns pessimistic. They also point fingers at the inferior quality of cottonseeds floating in the markets leading to lower yields. Added to this is inadequate water availability, which affects the cotton crop largely. They also blame the experts who carve policies for the sector.

ATTEMPT TO CREATE OPTIMISM

Past statements of different ministers are trying to create optimism but those connected with the trade finds these statements hardly convincing. While inaugurating the International Machinery Exhibition of Garment and Textile Technology, "MEGATECH 2009" at the Karachi Expo Center textile minister said the government seeks to boost textile exports to US $40 billion in the next few years.

He also said, "Establishing apparel cities in Karachi, Lahore and Faisalabad coupled with various other measures, would go a long way in realization of this goal and could be harbinger for new vistas of development in the industry and the country" and assured the trade of all cooperation from the government in their hour of crisis.

He said, "The government is sincere in its commitment towards the sector and would take all possible measures to address the genuine grievances of the sector and all existing problems of shortage of gas and electricity would be addressed on a war footing basis", and termed the sector as mainstay of the economy and the country.

EXPIRY OF ANTI DUMPING DUTY ON BED LINEN

The anti-dumping measures imposed in the past, on imports of bed linen from Pakistan expired on March 5, 2009, since not a single country has filed an application to review the measures by the first week of December, the last date to filing application for continuation of this duty.

The textile industry has reasons to celebrate this because it can help in boosting export of this value-added sector. This duty was initially imposed in early 2004. Pakistani exporters vehemently protested against the duty of 13.1 per cent.

Due to the opposition and subsequent reviews by the European Commission the duty was reduced to 9.9 per cent in the first review and further brought down to 7.6 per cent and was finally reduced to 5.8 per cent in May 2006. The textile sector had lobbied hard to have even the 5.8 percent duty removed.

According to informed sources, the country has lost billions of dollars exports of bed linen because of imposition of this duty. This has also facilitated Pakistan's traditional competitors to penetrate this stronghold of Pakistan. As a result neighboring Asian competitor countries like China, India, and Indonesia succeeded bin enhancing their export of bed linen to European Union.

SUPPLY CONSTRAINTS HURTING MORE THEN GLOBAL CRISIS

There is growing consumes among the local producers of textiles and clothing that supply constraints are hurting more than the global recession. Due to hike in interest rates and energy products and load shedding of electricity for extended hours, competitiveness of value adding units has eroded largely.

The secretary, ministry of commerce while speaking at the Lahore Chamber of Commerce and Industry, lately said that Pakistan was trying its best to get preferential access for the textile products in the European Union.

He also admitted that supply constraints were more profound than the international crisis and were hurting exports from the country. Apart from taking measures to diversify destinations in exports, the country was initiating FTAs with other countries. "The Government is well on its way to initiating a FTA with Indonesia and would also negotiate for the same with the European Union and the US but the business community would have to show greater responsibility, he concluded.

ROLE OF TDAP

As the buyers are reluctant to come to Pakistan, the alternative is to reach them. In this endeavor, Trade Development Authority of Pakistan (TDAP) has to play its due role in arranging visits of Pakistani manufacturers to the key markets, ensuring greater participation of Pakistani manufacturers in the international fairs, and arranging single country exhibition. Some of the cynics may say that undertaking this plan may not yield immediate results. However, they forget that the constant interaction with the overseas buyers is very important. Exporters should not focus on getting the first order but ensuring repeat business.