Faltering exports, slow growth in manufactures
Faltering exports, slow growth in manufactures
By Sultan Ahmad
Pakistan’s exports are faltering with the textile exports being more critically affected in a period of increasing global competition.
It is witnessed simultaneously with the fall in growth in the manufacturing sector to 8.6 per cent in the last fiscal year, compared to 12.6 per cent the year preceding that and 14 per cent in the year before that, according to the Economic Survey of Pakistan.
A total investment of $3.47 billion has been made on the import of textile machinery between 1999-2000 and last year and that includes $598 million, $700 million and $654 million during the last three years.
In addition, a great deal of money has been spent in local currency in the construction of buildings and other facilities for the expansion of the industry, raising the total investment to$6 billion.
The APTMA leaders have been talking of investing $5 billion in the machinery for modernisation and expansion of the industry to face diverse challenges of the post quota world.
Before the quota expired, they were assured markets for Pakistan as well as other developing countries. The textile leaders were then bragging they would do far better in a quota-free world, but now the reality is proving to be contrary.
Like Pakistan, China began developing its textile industry from 1990 and from the year 2004, China exported textiles for $95.29 billion, while the Pakistani textile export was $9.5 billion—just one-tenth of China’s exports.
Of the total investment of $6 billion made in the textile sector 1999-2006, 47 percent was on spinning and 26.3 per cent in weaving and only five per cent on garments. Hence the earnings from the value- added in the industry are very small. Little can be earned from exporting low count yarn and a lot more from the garment sector, if only the investment on it was far more than the measly five per cent.
In addition new players have entered the textile export world and they include Vietnam, Cambodia, China and Eastern Europe, says Tariq Ikram, Chairman, Export Promotion Bureau. If Japan could develop a major textile industry without growing any cotton, other countries in the region could emulate it. Bangladesh is a notable example that has large textile exports without growing any cotton. Its women power is skilled and it keeps the industry thriving.
Our textile exporters keep on complaining against the high cost of production in Pakistan and high rates of electricity and gas and high wages in relation to productivity of labour and of lower prices of exports from India and Bangladesh, not to talk of China’s exports.
We keep on targeting far larger exports on paper. After we failed to achieve the exports of $17 billion last year and recorded the exports of $16.5 billion, we talked of achieving $25 billion exports per annum in three years and are now setting the goal of $40 billion exports in five years. But what matters is not ambitious targeting but actually achieving them, beginning with $18.6 billion exports this year, by removing all the road blocks in the way and the cobwebs that clog our vision.
Tariq Ikram says that Pakistan has to win the prize war in the region as our competitors like India, Bangladesh and China are sending their textile products at far lower prices. And he has called for a support programme for the textile industry for 12 to 24 months to win the prize war. And he wants the mindset against the textile industry to change and become more helpful.
The government is moving towards being helpful to the textile sector slowly and not with adequate promptness, complain the textile millowners.
The State Bank of Pakistan has reduced the export refinance rate by 1.5 per cent and the banks have been asked to charge only one per cent more to deliver the loan. But the exporters want a far lower refinance rate.
The Economic Coordination Committee of the Cabinet has approved a package of $25 billion to provide support to the textile industry, particularly in the area of research and development.
And now the State Bank has allowed a one-time refinance for the textile sector for loans for plant and machinery obtained after January 1, 2003. The scheme will not cover the spinning sector except for six specified processes.
While such relief is helpful to the textile industry, several of its segments are still hit hard by the high cost of production and are seeking relief for themselves. Among them are a large number of garment makers, closed power looms and many hosiery units. The official relief has to become adequate and more widespread to enable the industry to become more competitive against the major regional players.
The primary requirement for larger exports is an adequate exportable surplus. But the final official figures show that the growth in large scale-manufacturing (LSM) sector fell by 46 percent during the last fiscal year compared to the preceding year. Many segments of the LSM performed poorly with a growth rate of 10.68 per cent last year against the 15.6 per cent growth in the proceeding year.
And the textile sector recorded a growth of only 4.27 per cent against 24.7 per cent in the previous year. With a larger sector of the industry performing so poorly, the LSM growth has to be very disappointing.
The textile industry directly or indirectly provides employment for the largest number of workers. If the growth of such an industry is stunted, not only will the exports suffer but also employment. Certainly the industry would not want to be exporting more at a loss to itself.
If the last year was disappointing for the LSM sector, things did not improve in July, the first month of the new fiscal year. The non-textile sector output declined by 7.8 per cent in July compared to July last year.
Now the advisor to the prime minister on finance Dr Salman Shah has asked the bankers to help in finding new export markets and make larger exports possible. He wants them to bring in foreign investors as well.
The banks may be able to identify some new markets, but they cannot produce export items at competitive rates. The industrialists have to manufacture them with requisite assistance from the government.
It is time the value added in textiles is enhanced by exporting more of the quality products with the exporters acquiring a name and fame for their brands which they have to cultivate very diligently.
By Sultan Ahmad
Pakistan’s exports are faltering with the textile exports being more critically affected in a period of increasing global competition.
It is witnessed simultaneously with the fall in growth in the manufacturing sector to 8.6 per cent in the last fiscal year, compared to 12.6 per cent the year preceding that and 14 per cent in the year before that, according to the Economic Survey of Pakistan.
A total investment of $3.47 billion has been made on the import of textile machinery between 1999-2000 and last year and that includes $598 million, $700 million and $654 million during the last three years.
In addition, a great deal of money has been spent in local currency in the construction of buildings and other facilities for the expansion of the industry, raising the total investment to$6 billion.
The APTMA leaders have been talking of investing $5 billion in the machinery for modernisation and expansion of the industry to face diverse challenges of the post quota world.
Before the quota expired, they were assured markets for Pakistan as well as other developing countries. The textile leaders were then bragging they would do far better in a quota-free world, but now the reality is proving to be contrary.
Like Pakistan, China began developing its textile industry from 1990 and from the year 2004, China exported textiles for $95.29 billion, while the Pakistani textile export was $9.5 billion—just one-tenth of China’s exports.
Of the total investment of $6 billion made in the textile sector 1999-2006, 47 percent was on spinning and 26.3 per cent in weaving and only five per cent on garments. Hence the earnings from the value- added in the industry are very small. Little can be earned from exporting low count yarn and a lot more from the garment sector, if only the investment on it was far more than the measly five per cent.
In addition new players have entered the textile export world and they include Vietnam, Cambodia, China and Eastern Europe, says Tariq Ikram, Chairman, Export Promotion Bureau. If Japan could develop a major textile industry without growing any cotton, other countries in the region could emulate it. Bangladesh is a notable example that has large textile exports without growing any cotton. Its women power is skilled and it keeps the industry thriving.
Our textile exporters keep on complaining against the high cost of production in Pakistan and high rates of electricity and gas and high wages in relation to productivity of labour and of lower prices of exports from India and Bangladesh, not to talk of China’s exports.
We keep on targeting far larger exports on paper. After we failed to achieve the exports of $17 billion last year and recorded the exports of $16.5 billion, we talked of achieving $25 billion exports per annum in three years and are now setting the goal of $40 billion exports in five years. But what matters is not ambitious targeting but actually achieving them, beginning with $18.6 billion exports this year, by removing all the road blocks in the way and the cobwebs that clog our vision.
Tariq Ikram says that Pakistan has to win the prize war in the region as our competitors like India, Bangladesh and China are sending their textile products at far lower prices. And he has called for a support programme for the textile industry for 12 to 24 months to win the prize war. And he wants the mindset against the textile industry to change and become more helpful.
The government is moving towards being helpful to the textile sector slowly and not with adequate promptness, complain the textile millowners.
The State Bank of Pakistan has reduced the export refinance rate by 1.5 per cent and the banks have been asked to charge only one per cent more to deliver the loan. But the exporters want a far lower refinance rate.
The Economic Coordination Committee of the Cabinet has approved a package of $25 billion to provide support to the textile industry, particularly in the area of research and development.
And now the State Bank has allowed a one-time refinance for the textile sector for loans for plant and machinery obtained after January 1, 2003. The scheme will not cover the spinning sector except for six specified processes.
While such relief is helpful to the textile industry, several of its segments are still hit hard by the high cost of production and are seeking relief for themselves. Among them are a large number of garment makers, closed power looms and many hosiery units. The official relief has to become adequate and more widespread to enable the industry to become more competitive against the major regional players.
The primary requirement for larger exports is an adequate exportable surplus. But the final official figures show that the growth in large scale-manufacturing (LSM) sector fell by 46 percent during the last fiscal year compared to the preceding year. Many segments of the LSM performed poorly with a growth rate of 10.68 per cent last year against the 15.6 per cent growth in the proceeding year.
And the textile sector recorded a growth of only 4.27 per cent against 24.7 per cent in the previous year. With a larger sector of the industry performing so poorly, the LSM growth has to be very disappointing.
The textile industry directly or indirectly provides employment for the largest number of workers. If the growth of such an industry is stunted, not only will the exports suffer but also employment. Certainly the industry would not want to be exporting more at a loss to itself.
If the last year was disappointing for the LSM sector, things did not improve in July, the first month of the new fiscal year. The non-textile sector output declined by 7.8 per cent in July compared to July last year.
Now the advisor to the prime minister on finance Dr Salman Shah has asked the bankers to help in finding new export markets and make larger exports possible. He wants them to bring in foreign investors as well.
The banks may be able to identify some new markets, but they cannot produce export items at competitive rates. The industrialists have to manufacture them with requisite assistance from the government.
It is time the value added in textiles is enhanced by exporting more of the quality products with the exporters acquiring a name and fame for their brands which they have to cultivate very diligently.
posted by India News Watch at 9:05 PM
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