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News Clips 28 November, 2015

[ Textile export declines for fourth consecutive month ]
[ Textile export slide renders GSP Plus opportunity irrelevant ]
[ PTEA criticises cut in gas supply quota ]
[ Non-textile exports decline 22pc ]

Textile export declines for fourth consecutive month   [ top ]

The Nation, November 28, 2015
As the exports of textile and clothing have been declining sharply during the first four months (July-Oct) of 2015-16 the value-added textile industry has cautioned the government to address the problems of the sector, as the current drop in exports may widen further in the next quarter.

PRGMEA chief coordinator Ijaz Khokhar asked PM Nawaz Sharif to personally intervene, making a policy for reduction in all input costs otherwise the export-oriented industries would not only close down their operations but millions of workers would also lose their jobs. He said that the PM had committed to hold meetings with export-oriented industries on quarterly basis but no such meeting was held so for.

PRGMEA chief coordinator said that this is because of the fact that the value added textile sector is burdened with multiple taxes with high cost of inputs, tariffs of gas, electricity, raw material, etc, and is further harassed due to short supply of all these most essential utilities, he added. Ijaz Khokhar said the government has increased the sales tax from 2% to 3% in the budget, which led to piling up of exporter’s refunds with the tax department. The government has also imposed 10% regulatory duty on yarn imports from India, mostly used by knitwear and woven apparel segments, to further increase the cost of doing business, he said. Thus, price of domestically produced yarn increased manifold, he added.

Pakistan Knitwear and Sweater Exporters Association North Zone chairman, Shahzad Azam Khan, observed that country will face a drastic decline in its export following the attacks on France. According to him, the exports have dropped by 10.63% to $1.051 billion monthly in October 2015 from $1.176 billion in the same month last year in spite of GSP plus status granted to Pakistan. Quoting latest figures, he said that exports of value-added textile sector, after increasing for three consecutive months, also witnessed a negative growth due to harsh decisions against the value-added sector. The sector exports had grown by 3% in July-Sept 2015-16. But during October 2015, readymade garments exports fell by 0.36%, knitwear 9.5% and bedwear by 8.92%. The textile exports of Pakistan got a boost of 13% due to import duty concessions under the European Union’s (EU) Generalised System of Preferences (GSP) scheme in the outgoing fiscal year.

Shahzad Azam Khan observed that the value-added textile sector is not against spinning sector but it wants that whole textile chain be safeguarded because the sector has a tough competition in garments with regional competitors like Bangladesh, China and India.

Shahzad Azam suggested that import of yarn should be totally tax-free besides the imports of garments and unstitched clothes should be banned, so that the local industry could be boosted. When Pakistan was granted GSP Plus status by the EU the Indian government immediately announced incentives for its exporters to compete Pakistan. And again the Indian government announced rebate for its yarn exporters when Pakistan imposed additional 10 percent duty on import of yarn from the neighbouring country. 

Shahzad Azam demanded the liberal import policy for raw materials for re-export like duty-free import of fabrics and accessories same as Bangladesh. PRGMEA NZ Chairman Sohail Sheikh observed that besides improving law and order, and providing non-stop gas and electricity supply, the government would have to relax import policy to empower value-added textile industry to get the maximum benefit of GSP Plus status, as the country had no raw material except cotton. 

Sohail Sheikh said that the bleak exports figures clearly indicate that the country’s value-added textiles are falling to an alarming level. He slammed the indifferent attitude of TDAP, commerce as well as textile ministries for showing no signs to address the serious exports matter and unfold its preparation to salvage the national economy. 

Textile export slide renders GSP Plus opportunity irrelevant   [ top ]

Business Recorder, November 28, 2015
The plunging textile exports belie the PML-N government's claims of the GSP plus facility would turn the country's economy around with a $2 billion immediate jump. Nearly all textile exports nose-dived, except the towel and readymade garments one showing a growth of merely 4.17 percent ($10.712 million) and the other 4.10 percent ($26.8 million), respectively in July-October 2015-16. 

"The GSP plus, which was introduced in January 2014, has utterly failed to give even a slight boost to the existing textile exports," Central Chairman, Pakistan Readymade Garments Manufacturers and Exporters Association (Prgmea) Ijaz Khokhar told Business Recorder on Friday. Overall textile exports, in the first four months of current fiscal year, scaled down by 7 percent $316 million to $4.271 billion from $4.587 billion in the same period last fiscal year, Pakistan Bureau of Statistics (PBS) said. 

Quantity of towel export also mounted by 7.07 percent or 3, 758 metric tons to 56,948 metric tons in July-October 2015-16 from 53,190 metric tons in the same period last fiscal year. Readymade garments export, in term of volume, however declined by 7.24 percent or 3, 071,000 dozens to 6,948,000 dozens from 10,019,000 dozens, the PBS shows. 

"It is not a big growth. All will be negative in coming months," Khokhar showed disappointment over a slight increase in textile two sub-sectors, and attributed the fresh growth to the bulk apparel and home textile exports for Christmas and New Year celebrations in the US and Europe. Bed-wear export nose-dived by 8.02 percent or $58.773 million to $674.567 million from $733.340 million and volume by 8 percent or 28, 743 metric tons to 104,889 metric tons from 133,632 metric tons. 

Knitwear export dipped by 2.16 percent or $18.079 million to $820.299 million from $838.378 million, and, in term of quantity, by 3 percent or 1,018,000 dozens to 36,289,000 dozens from 35,271,000 dozens. Export of cotton cloth slumped by 9 percent or $73.373 million to $761.813 million from $835.186 million, and volume by 8 percent or 52, 523metric square meters to 619,252 square meters from 671,775 square meters. 

Cotton yarn export came down by 21.04 percent or $134.322 million to $504.209 million from $638.531 million and quantity by 14.37 percent or 3, 2248 metric tons to 192,193 metric tons from 224,441 metric tons. Exports of raw cotton by 10.21 percent down, cotton carded or combed by 98 percent, yarn other than cotton yarn by 23 percent, tents, canvas and tarpaulin by 49 percent, art, silk and synthetic textile by 20 percent, made-up articles by 0.17 percent and other textile goods by 2.16 percent. 

"Textile exports will continue to fall in coming months once the religious celebrations in west comes to an end," the Prgmea chief said, slamming Trade Development Authority of Pakistan (TDAP) and Federal Commerce Minister for the growing trade deficit. Fearing on falling short of exports targets, he said that the federal government's preferences had been indifferent to augmenting the national trade and accumulating revenues. "Textile exports in November-December 2015 will decline and do not reflect on the national manufacturing potential," he added. 

He warned the government of further decline in the exports on 'worst' global demand from December 2015 to January 2016, saying that the lean period would end somewhere by end of February or start of March next year. "Buyers will start placing orders after their stocks are sold out," he said. He termed the blocking of sales tax refund by the PML-N government to the textile sector as 'main' factor pulling down exports and hindering economic growth, saying that "if such an economic fall in a western country had happened, the entire cabinet would have been shaken up. But here no one is bothered". 

He called the prime minister 'ignorant' to the country's falling exports and textile sector's crisis, failing to implement Textile Policy, provide incentives and stir up the entire cabinet to help cope with the falling economy. "TDAP role is zero while commerce minister is indifferent like prime minister," he criticised. 

GSP plus is a showpiece and not more than that, he showed desperation after the facility allowing Pakistan to exports its goods to the EU markets duty-free had failed to give growth the national economy, despite the government had claimed the access would yield $2 billion immediate increase. Khokhar was unable to understand whether what had held back the prime minister to appoint a textile minister to end falling exports streak, saying that "it has been a year that there is no textile minister despite exports are falling". He said the prime minister was also unable to recognise the textile sector's liquidity crisis emerged from the government's sales tax imposition. 

Cost of business is ever rising, he said, adding that the government had extended its incentives only to the spinning sector leaving the entire value-added exporting sub-sectors high and dry. "At least Rs 2 billion of value-added textile sector the finance ministry has blocked under sales tax refunds, scaling down manufacturing badly," he said. Slamming the government for 10 percent duty on import of yarn, he said that the imposition was just aimed at facilitating the spinning sector at the expense of local apparel manufacturing-cum exporting sector. The imposition failed to end yarn import as the raw material is cheaper on the global market than at home, he said, asking the prime minister to end sales tax on exports and reintroduce the zero-rated facility. 

PTEA criticises cut in gas supply quota   [ top ]

Business Recorder, November 28, 2015
Pakistan Textile Exporters Association (PTEA) has strongly criticised the cut in gas supply quota for textile industries, terming it an attempt to shatter the whole industrial chain. PTEA Chairman Asghar Ali and Vice-Chairman Arif Mahmood Qureshi said that the move would not only affect the industry but the government would also be the ultimate loser on many counts. They asked the government to ensure at least 25 percent gas supply to textile export sector in winter under the quota regime. 

Criticising the explanation of the gas managers that supply was compressed due to cold weather, they said that the weather had not yet touched the critical temperature point. Gas supply to export-oriented textile sector never dropped from 20 percent in the past, they said and added that the reduction in gas supply would cut down drastically the manufacturing of export goods and exporters would not be able to fulfil their commitments to foreign buyers. 

They termed energy shortage as the prime cause of economic instability and decline in industrial growth as a sizeable textile capacity had been severely impaired and textile exports, both in terms of quantity and value, had declined across the value chain. "It is very unfortunate that energy shortfall has totally been shifted to the industry. Government, on one side, is contemplating to increase targets for industrial growth and on the other side its unjustified decisions are posing severe threats to achieving the said targets," they regretted. 

The PTEA chairman said that at the moment when the industrial production and exports were registering negative growth and the industrialists were facing severe difficulties, reduction in gas supply would further lead to financial loss. The PTEA Vice-Chairman said that at a time when all the neighbouring countries were on the path of rapid growth, the economic situation in Pakistan was getting worse. They called upon the government to take serious cognisance of the matter and take practical steps to support the industry. 

Non-textile exports decline 22pc   [ top ]

DAWN, November 28, 2015
ISLAMABAD: Pakistan’s non-textile exports fell by 22.56 per cent to $2.605 billion during the first four months (July-Oct) of 2015-16 from $3.364bn in the same period last year, Pakistan Bureau of Statistics data showed on Friday. 

Product-wise details showed a decline of 80.25pc year-on-year in exports of overall petroleum products, mainly due to a 99.48pc drop in petroleum naphtha exports. Crude exports also declined by 57.08pc. 

Carpets and rugs exports fell by 13.40pc during the period and exports of sports goods dipped 6.50pc year-on-year. Exports of tanned leather dropped 22.48pc and leather products by 16.80pc. 

Footwear exports dipped 28.97pc, primarily due to 34.96pc decline in exports of leather footwear. Last year, footwear exports grew on the back of preferential access to European markets under GSP+ scheme. 

Exports of surgical goods and medical instruments went up by 4.38pc, while engineering goods exports dipped by 22.09pc during the period under review. On a year-on-year basis, exports of gur declined by 59.02pc, cement 36.18pc, handicraft 100pc, molasses 33.31pc, furniture 23.52pc, gem 55.58pc and jewellery by 2.08pc. 

In the food basket, rice (basmati and non-basmati) exports dropped by 6.37pc. Exports of oil, tobacco also witnessed decline during the period under review. However, exports of vegetables, spices, wheat and meat witnessed a growth.