EXPORT OF TEXTILE AND CLOTHING SHOWS UPWARD TREND IN NOVEMBER

KANWAL SALEEM
(feedback@pgeconomist.com)
Dec 24 - 30, 20
12

Following slight surge in demand from key markets of Europe and United States, the export of textile and clothing continued with its rising trend in November for the third consecutive month.

The export of textile and clothing posted a hefty growth of 23.54 per cent in November from a year ago. The growth in export was 10.54 per cent in October, and 12.91 per cent in September. The growth can be attributed to substantial increase in export proceeds of ready-made garments, towels, and other low value products, such as cotton yarn and cotton cloth, etc but export of raw cotton witnessed a decline in November over the previous year, sources in textile industry said.

As per statistics made available to PAGE, the overall export of textile and clothing reached to $5.4 billion in July-Nov period of the current fiscal year as against $5 billion over the same months last year, showing an increase of 7.81 percent.

This helped the country's total export to grow by 7.85 per cent to $10.081 billion during the first five months of 2012-13 as against $9.347 billion over the corresponding period last year.

A sector-wise analysis showed that export of ready-made garments went up by 17.80 pc, knitwear 14.60pc and towels 52.37 pc in November this year over last year. Trade experts linked growth in export of value-added products with a spillover effect from China, Taiwan's labour issue and the announcement of waiver on 75 products from EU from Nov 15 encouraged European buyers to re-develop contacts in Pakistan.

Major European buyers are eying to yield benefits in case EU grants Pakistan GSP plus status in 2014. American buyers are also re-establishing contacts with Pakistan's textile and clothing exporters after disruption in supply from Egypt.

Export of low value-added products such as cotton yarn was up by 41.32pc, cotton cloth 38.07pc, yarn other than cotton yarn 143.31pc, made up articles 15.28 pc and other textile material 85.22 pc in November this year over same month last year.

Industry sources said consistent supply of gas in July-Nov period to textile sector produced the desired results. The growth in yarn and fabric exports was mainly because of improved energy supply. The full capacity utilisation of production caused growth in export of home textile - towels and bed-wear as well. This shows that in case of uninterrupted supply of energy, export of textile products would increase manifold.

According to Mirza Ikhtiar Baig, Adviser to the Federal Government on Textiles, Pakistan's textile exports to Turkey will get massive boost after the signing of the Preferential Trade Agreement (PTA) between the two countries next month.

Pakistan and Turkey are set to sign the PTA on January 1, 2013.

He said the signing of the PTA would result in 6.4 per cent reduction in duties on textile imports by Turkey from Pakistan.

He said the duties would come down to 18.1 per cent from the current 24.5 per cent after the PTA becomes effective. He said Pakistan's exports to Turkey stood at around $650 million and largely comprised of textile products.

"The PTA will help boost the bilateral trade to $2 billion from $1 billion in a short time with the domestic textile industry being the major beneficiary," he said, adding, "The textile industry would get a benefit of $320 million from EU trade discounts on 65 textile items."

On the implementation of 2nd phase of the FTA with China, the adviser said it would open up China's market for Pakistani raw materials as the Chinese textile industry was phasing out production of basic textile products due to 20 per cent increase in wages and other costs.

He said the duty on all Pakistani products to India barring 100 items would range in between five to 10 per cent from April onwards, opening a new window of opportunity for Pakistan in the Indian market. "The export of coarse count yarn and its products to India would increase exponentially once bilateral trade is liberalised."

Mr. Baig said Pakistan textile industry would get a benefit of $320 million with duty free trade facility from the EU for concession on 65 items. He said this facility would continue until December 31, 2013.

Regarding the GSP Plus status to Pakistan in the EU from January 2014 onwards, he said, the criteria has been revised and approved by the EU and all its exports would easily by accommodated under the facility from January 2014.

According to him, Pakistan textile industry is exporting over $600 million products to the EU presently. On the implementation of 2nd phase of FTA with China, Dr Baig said it would open Chinese market for Pakistani raw materials, as Chinese textile industry is phasing out of production of raw material as well as value added textile products due to 20 percent increase in wages.

Regarding trade with India, he said, duty on all Pakistani textile products, barring 100 items, would range in between 5 to 10 percent from April 2013 onwards that would open a new window of opportunity for Pakistan in Indian market. On MFN status to India, Dr Baig said Pakistan is offering this status to India as per commitment because it was a WTO condition to be fulfilled by every member state without objection.