GSP PLUS ON CARDS
ENERGY CRISIS IS ERODING EXPORT POTENTIAL.
June 25 - July 1, 2012
The Consul General of federal Republic of Germany Dr Tilo Killner has hinted out Pakistan's qualification for the new scheme - GSP Plus (generalized system of preferences) and advised the stakeholders to get prepared for it.
Addressing to the members and office bearers of Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) at a presentation held by Vice Chairman Pakistan Readymade Garments Technical Training Institute (PRGTTI), the German diplomat said that the new scheme of GSP Plus is in place and Pakistan generally qualifies for it. He, however, said that GSP Plus is linked with 27 conventions on good governance and accordingly efforts are needed to ensure that all these conventions are implemented.
Pakistan is at the starting point and it's just like qualifying for preliminary round of the Olympics. Every member of European Union has its own commercial interest and there could be difference of opinion and that's why nothing can be guaranteed on individual basis as decisions are made in the EU Parliament with consensus, Dr. Tilo pointed out. However, Germany supports Pakistan for greater market access, which reflected in the fact that balance of bilateral trade between the two countries is in favor of Pakistan.
Pakistan is a young country with majority of its population is youth and textile sector is labor intensive. He, however, said that Pakistan is passing through energy crisis and Germany is ready to provide assistance in this regard. He said that besides alternative, renewable, and solar power, Germany is a major player in wind energy and Pakistan can acquire its services in this sector, the German diplomat said adding that German companies have also shown some interest in Thar coal project as well.
A number of German companies are already operating in various fields in Pakistan and that his country always encourages its stakeholders to trade with Pakistan. He said that travel advisory to German nationals is issued only when some area is having unrest and we advise our people to contact consulate office. Otherwise, Germany encourages its businessmen to ravel to Pakistan. He said that he would support PRGTTI to get technical and other assistance for training of skilled and semi skilled workers in Pakistan. He said that he was quite inspired from the performance of PRGTTI.
Dr. Klinner said that the proposed EU Trade Concession Package of 75 items is in technical stage and he is optimistic about it and hopefully Pakistan will get it finally. In this meeting, Dr. Klinner said that Germany has from the beginning been one of the driving forces behind the EU trade preferences and is now looking forward to a swift enactment of EU regulations.
The Central Chairman PRGMEA, Shehzad Salim, said that Germany is the second largest importer of Pakistan's clothing. According to Shehzad Salim. Pakistan's clothing exports to Germany crossed $336 million in 2011-12. However, these exports are on decline due to precarious situation prevailing in Western Europe. Under the situation, Germany should support Pakistan in getting EU Package and GSP Plus as Pakistan has qualified for it with effect from January 2014. As far as the role of PRGMEA and PRGTTI is concerned for promoting quality value added textile products, the PRGTTI has so far trained as many as 14,460 workers across the country. The institute in collaboration with a number of foreign government and non-governmental organizations such as UNDP, USAID, ILO, etc .was endeavoring to upgrade quality products responding to market demand.
VALUE ADDED TEXTILE EXPORTS
Minister for Finance, Dr Hafeez Shaikh, while outlining the performance of the value added textile exports has acknowledged that readymade garments worth $ 1.2 billion were exported during last nine months of fiscal 2012. In quantity terms, the decline in the exports of readymade garments was 22.5 percent. He informed that the garment industry provides highest value addition in the textile sector. The industry consists of small, medium, and large-scale units, most of them having 50 machines and below. Large units are now coming up in the organized sector of the industry. The production of synthetic fabric was recorded at 1,311,550 million square metres during 2011-12 (July-March) as compared to 1,478,571 million square meters last year.
The art silk and synthetic weaving industry has developed as a cottage industry over the time, based on power looms. He said units comprising 0-10 looms are spread all over the country. The major concentration is in Karachi, Faisalabad, Gujranwala and Jalalpur Jattan as well as in the unsettled areas Bara, Swat, Khyber Agency and Waziristan. Similarly, regarding towel industry, he said exports in this sector stood at $488 million as against $580 million in the comparable period of last year, showing a decrease of 15.9 percent.
As electricity and gas shortage folded 70 percent production, Pakistan's value-added textile sector has started shunning entertaining fresh global export orders for its failure to ensure timely shipments to the buyers.
Manufacturers and exporters said that the government was concentrating on the next general elections, as power and gas crisis reduced the textile sector production to mere 30 percent.
The exporters of value added textile products have a valid argument that how they could entertain fresh orders when the entire sector's production hovers over 30 percent while several manufacturing units have gone out of operation due to the energy crisis. The country's textile subsector registered decline in export during the first 10 months of 2012 fiscal year, which is rightly attributed to the poor supply of energy to the industrial units and called it a failure of the policy makers in stemming the export decline.
The abnormal electricity load shedding at present has reduced the production of garments by 70 percent. The manufacturers were unable to meet the global shipment deadline for their consignments as power load shedding has paralyzing effects on the output chain in the industrial units especially in Punjab.
Fresh orders are not being entertained because of overwhelming fears amongst the exporters about their inability to ship the consignments on time to the global buyers while the continued delay in export orders already has damaged out image internationally.
In terms of value, in the first 10 months of the current fiscal year, export of knitwear fell by 13.13 percent, bed-wear by 13.81 percent, towels by 8.43 percent and readymade garments by five percent, according to Pakistan Bureau of Statistics. In terms of volume, export of Pakistan's key textile sub-sectors also suffered, as knitwear fell 26.6 percent, bed-wear by 19.73 percent, towels by 18.46 percent and readymade garments by 27.35 percent, the statistics said.
It is feared that country's total textile export could plunge by at least $4 billion this fiscal year because of the severe crisis casting a widespread impact on the manufacturing sector.
Knitwear export in terms of volume fell to 79,729 metric tonnes in the first 10 months of the current fiscal year from 107,161 metric tons in the same period of last fiscal year, showing a decline of 27,432 metric tonnes, the PBS figures showed. In terms of volume, knitwear export nosedived to $1.624 billion in the first 10 months of the current fiscal year from $1.870 billion in the same period of last fiscal year, indicating a slump of $245.550 million.
Export of bed-wear reduced to 205,332 metric tonnes in the last 10 months of the current fiscal year from 255,798 metric tonnes, describing a fall of 50,466 metric tones.
Bed-wear export in terms of volume fell to $1.453 billion in the first 10 months of the current fiscal year from $1.685 billion during the same period of last fiscal year, showing a reduction of $232.867 million.
Export volume of towels fell to 115,184 metric tonnes during the first 10 months of the current fiscal year from 141,260 metric tonnes in the same period of last fiscal year, falling by 26,076 metric tonnes. In terms of value, the export of towels thinned to $55.493 million from $607.753 million, plunging by $51.260 million. Size of export of readymade garments reduced to 20,631 metric tonnes from 28,398 metric tonnes, showing a slump of 7,767 metric tonnes.
Value of garments export also plunged to $1.326 billion in the first 10 months of the current fiscal year from $1.396 billion in the same period of last fiscal year, depicting a reduction of $70.472 million, the statistics showed. Commenting on the worrying export statistics, the financial viability of entertaining foreign order had been diluted by the power outages, leaving some 50 percent of employment downsized in the sector. Consequently, exporters have stopped seeking new contracts from foreign buyers.