Pakistan Books 26.5% Textiles Export Growth Despite Challenges

KARACHI, May 14 Asia Pulse - Responding to accusations of misuse of R&D funds, Iqbal Ebrahim, Chairman of All Pakistan Textile Mills Association (APTMA), said the sector booked a 26.5 per cent increase in exports, despite challenges weakening the competitiveness of the industry.

Mr Ebrahim said Pakistan's textile exports increased from US$8.564 billion to US$10.757 billion in 2006-07, compared to 2004-05, marking growth of 25.6 per cent.

More specifically, the sector booked US$5.972 billion in exports during July March 2004-05, whereas for the corresponding period of 2007-08 it recorded US$7.766 billion, showing an increase of US$1.794 billion or 30 per cent.

Mr Ebrahim said in a statement, "the industry is facing manifold problems such as massive load shedding and the suspension of gas supplies which has caused an unprecedented disruption to the industrial production all over the country. At the same time, the cost-push factor is making our exports uncompetitive."

"Due to the law & order situation prevailing in the country, foreign buyers are reluctant to come to our country and prefer to go to safer destinations, which is an additional cost borne by our exporters as they have to travel to other destinations to meet their buyers/customers and it also hampers the development of product and design," he said.

In response to the corruption claims, Mr Ebrahim said that the items within the textiles sector entitled for R&D Support has shown a growth of 25 per cent to 30 per cent during the last three years.

"The 3.14 per cent decline in textile sector exports during the first 9 months of the current fiscal year compared to the corresponding period of the last financial year is due to many reasons, such as increase in cost of doing business, import of about 25 per cent of the raw material - cotton - to meet the consumption requirements of the industry."

In addition, the products of a number of textile exporters are stuck in United States and other countries due to a slowdown of their economies, he said. "Due to withdrawal of duty free concession to our goods starting January 2005 by European Union, our exports received a set back because of continual increase in cost of doing business and we were losing our hard earned market share fast."

"Furthermore, duty draw back rates were slashed drastically and interest rates started to rise due to which R&D Support was provided to exporters to offset the cost. If this support was not given, the exports would have suffered beyond repair," he said.

According to the Chairman, Pakistan's textile sector invested about US$6 billion during the last 6 years at a lower interest rate of 3-4 per cent prevailing at that time, which is now ranging around 13-16 per cent.

He said the mark up rate on Export Refinance was increased from 3 per cent to 9 per cent which later on reduced to 7.5 per cent, but the banks are reluctant to provide finance at this rate due to change in the Refinance Scheme provided by the State Bank of Pakistan (SPB).

"Furthermore, Islamic Banks and Leasing Companies do not provide financing for exports under SBP Schemes," he said.

Referring to a news item published in the press that the textile sector is the biggest beneficiary of subsidised loans and has availed an Export Refinance of Rs. 176 billion (US$2.6 billion) in the first 9 months of the current fiscal year, Mr Ebrahim said that whereas the exports of textile sector during the same period was US$7.766 billion, which is about 2.7 times the amount of export refinance provided to the industry, it should be noted that the government has subsequently reduced the refinance facility from 70 per cent to 50 per cent.

In view of the above reasons and to make our exports, especially textile goods, competitive in the international market Chairman APTMA demanded that, "the Government should continue the R&D Support to the textile industry and resolve the issues concerning to the industry to earn much needed foreign exchange and to capitalize our share in the world textile exports."

(PPI)

Copyright © 2008 AsiaPulse Pte. Ltd. All rights reserved. Retransmission,dissemination or publication is expressly forbidden. Asia Pulse gives no warranty or guarantee as to the accuracy of the information and shall not be liable for errors, omissions, or delays or interruptions in the service.

Copyright © 2008 Yahoo! Southeast Asia Pte Ltd (Co. Reg. No. 199700735D). All Rights Reserved.
Privacy Policy - Terms of Service - Community - Help