TEXTILE EXPORTERS FEAR DISHONOURING ORDERS
Nov 1 - 7, 2010
Undoubtedly, textile industry is the premier industry of Pakistan, as it accounts for approximately 17 per cent of total value added by manufacturing sector and absorbs 33 per cent of industrial labour force.
Textile sector's contribution to foreign exchange earnings increased substantially with passage of time. However, those associated with the industry are critical of government policies and said despite largest share in export exporters are facing manifold problems due to persistent gas and electricity shortage, high cost of doing business and poor law and order situation.
The silver fibre commonly called cotton still remains as the leading textile fibre in the world. For centuries, it has been a dominating companion of world civilisations. It has clothed nations and promoted internal as well as international trade and commerce.
Cotton has also given birth to innumerable industries. It has served Pakistan as one of the strongest pillars of economy. Share of cotton and cotton goods in the total export earnings of the country stood at around 60 per cent. Indeed, millions of people in Pakistan earn their livelihood from cotton and cotton goods.
Despite the shortfall of cotton 2.5 million bales in the country this year, the excessive export of cotton and yarn is yielding negative impact over the industrialisation and investment in the country, while unemployment is creating lawlessness, businessmen said.
According to spokesman of Pakistan Hosiery Manufacturers & Exporters Association (PHMA) North Zone, the increasing rate of cotton and yarn as well as its hoarding and speculation are badly affecting the labour intensive and export oriented value added textile industry due to which the prices of polyester and cotton yarn are increasing.
The PHMA North Zone asked the government that the export of cotton and yarn should be restricted till meeting the demands of the domestic sector apart from eliminating the monopolists and capital Mafia, who are adding fuel to the fire by their speculative activities ignoring the national interests.
The spot rates cotton have reached at the all time record level of Rs8300 in the country due to advance export dealing, while working paper of federal committee on agriculture forecasting that the shortfall would jump up to 2.5 million bales due the recent floods.
During the first quarter of the current fiscal year, 3490 metric tons cotton were exported ignoring the increasing demands of the textile sector, as well as shortfall of the cotton crop in the country.
As per statistics, more than 121,463 MT cotton yarn was exported during the first quarter and cotton yarn exports registered an increase of 18.66 percent in term of rupees during the first quarter. These facts and figures are showing dangerous sentiments for future of labour intensive and export oriented value added textile sector.
Expressing concern over increasing cotton prices in the country, exporters said that value added textile industry is already facing severe crisis due to gas and electricity load shedding, high cost of borrowing from banks and too much high cost of necessarily raw material, which is building up the doing business. They demanded that the export of cotton and yarn should be restricted to control the non-stop prices of raw material and export should be allowed after meeting the domestic demands.
Central Chairman Pakistan readymade garments manufacturers and exporters association (PRGMEA) Ejaz Khokhar fears dishonouring some US$700 million export orders by the value added industry with an immediate slowdown in export business due to gas load shedding to the processing textile and exorbitant cotton prices.
According to him, the textile industry production cost has risen to 40 per cent due to short supplies of gas and cotton, which the customers are not ready to bear with the industry.
"The customers are ready to pay 5 to 10 per cent extra profit margins to textile exporters in Pakistan, which is still far below to the production cost of the industry."
Ejaz said, a cut to gas supply has put upside down in the whole textile chain leading to dishonouring of many garments orders ahead of Christmas in Europe and the US. He said the production of export orders is stuck in the pipeline due to the halted operations at processing, dyeing, and finishing stage with non-availability of gas to the captive power plants (CPPs).
It may be noted that the SNGPL has issued a schedule for the closure of gas due to low pressure, leading to crisis like situation in industry and CNG sectors. The domestic consumers, however, have not received the hit yet. About 50 per cent supply cut has perturbed the industry and CNG stations and they fear heavy losses ahead.
"The textile chain right from weaving to downstream is turning into bad shape due to short supply of gas and cotton simultaneously," Ejaz said.
He stressed that the government should ensure a cushion to the textile industry on gas load shedding until December this year to enable the industry fulfilling export orders in hand.
On cotton non-availability, Ejaz said many investors, farmers and ginners have withheld cotton stocks to cash the rising cotton prices in the US, already hit the record level of $1.30 per pound. He demanded the TCP of importing a buffer stock of about two million bales immediately. Pakistan has a shortfall of 3 to 3.5 million bales at present.