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News Clips 09 October, 2014

[ Marketing policy needed for boom in exports: PRGMEA ]
[ GSP Plus ]
[ Enhancing export volume: PRGMEA chief for aggressive marketing policy ]
[ Textile industry rejects cotton support price ]
JANG, December 23, 2013
   [ top ]

Marketing policy needed for boom in exports: PRGMEA   [ top ]

Daily Times, October 09, 2014
SIALKOT: Newly elected Chairman of Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) Ijaz Khokhar underscored the need to formulate a marketing policy for boosting exports to attain maximum benefits of the Generalised System of Preferences plus status.

We should accomplish homework at the earliest for fulfilling the plus status requirements. The European Union granted duty free access to Pakistani products under the GSP plus status in January this year.

Now Pakistani textile products could be exported duty free or on preferential duty basis for next ten years, he said. 

GSP Plus   [ top ]

Business Recorder, October 09, 2014
On 1st January 2014 Pakistan got the status of GSP (Generalized Scheme of Preferences) Plus from the European Union. The EU's "Generalized Scheme of Preferences" (GSP) allows developing countries' exporters to pay lower duties on their exports to the EU. This gives them vital access to the EU markets and contributes to their economic growth. But it is not an easy task to this status. The GSP Plus is preferences schemes which can be defined as full removal of tariffs on essentially the same product categories as those covered by the general arrangement. These are granted to countries which ratify and implement international conventions relating to human and labour rights, environment and good governance. European countries introduced the GSP in 1971 with a view to helping developing countries develop and diversify their exports. Under the GSP, the European countries either eliminated or reduced import tariff on specified products exported by approved developing countries, including Pakistan. This tariff preferential regime has been extended to GSP Plus through additional tariff reductions to vulnerable developing countries. The objectives of GSP Plus have been to assist developing countries in reducing poverty, improving governance and status rights and promoting sustainable development through trade. European Parliament has to approve status given to a country. Pakistan secured 406 votes in favour while 186 lawmakers voted against the status. Pakistan got this status after hectic efforts by its Federal Commerce Minister Engineer Khurram Dastgir who vigorously lobbied for it along with other parliamentarians and with the help of EU member countries ambassadors in Pakistan. It is a part of government of Pakistan's new strategy "Trade not Aid" and the whole team deserves kudos for achieving such a milestone in their efforts to enhance country's export especially to the European markets. Once the EU member countries used to be the one of the largest trading partners of Pakistan, but with passage of time it declined one-third in 1995-96. It declined to one-fourth in 2000-01 and further declined to almost 10 percent by 2010-11. But with the award of GSP Plus it is expected that it will allow almost 20 percent of Pakistani exports to enter the EU market at zero tariff and 70 percent at preferential rates. 

Prime Minister Nawaz Sharif congratulated the nation over the European Union award. "Award of GSP Plus status shows the confidence of international markets in the excellent quality of Pakistani products," he said in a statement. The prime minister further said: "gaining access to European markets was the top most priority of the government as part of economic development agenda, which has been achieved due to continuous hard work of the ministers and officials from the ministries of finance, commerce and foreign affairs and friends of Pakistan in Europe." This status would enable Pakistan to export more than US $1 billion worth of products to the international markets. Only the textile industry would earn profits of more than Rs 1 trillion per year. 

EU trade concessions will benefit the country's largest manufacturer and exporter - the textile and clothing industry - the most by enabling its products to compete with those of regional rivals such as Bangladesh and Sri Lanka, which already have duty-free access to the bloc's market. Finance Minister Ishaq Dar said the EU status will help Pakistani exports to rise by up to $2 billion. 

This preferential duty regime will not be enough to secure sustainable market access to the EU. It is just a start for a long run strategy which needs to be carried out not just by the government but the industry as well. Both need to invest in higher technology, standards compliance, certification, quality control and packaging, and demand-driven output. The GSP Plus status is given till 2017 but one has to look beyond the years when it will be over. The investment must be made keeping in view the years when the status is over. 

Another aspect of GSP Plus status is non-textile products such as sports goods, surgical instruments and Basmati rice, copper and animal casings, which already enter the EU duty-free under either GSP or MFN rates. For these products, the GSP Plus tariff preferences will have no positive market access impact. The biggest beneficiaries will be the textile and clothing sector under the GSP Plus package. 

GSP Plus alone will not be sufficient in enhancing our exports but it will give a much needed catalyst to Pakistan's Economy especially its access to European Market. The GSP Plus status show EU desire and commitment in helping Pakistani government in general and People in particular in improving their standard of life. The benefits of it we may not see immediately but in long run it will help to generate hundreds of thousands jobs for people in private sector and without the participation of private sector no country can achieve economic development. 

Enhancing export volume: PRGMEA chief for aggressive marketing policy   [ top ]

Business Recorder, October 06, 2014
The newly elected Central Chairman Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) Ijaz A Khokhar has underscored the need of formulating a aggressive sector wise marketing policy for bringing a big boost in exports and to attain maximum benefits of GSP Plus status. 

Talking to Business Recorder here on Sunday he said that it was high time that we should accomplish home work at earliest possible for fulfilling the GSP Plus requirements. European Union granted duty free access to Pakistani made-ups under Generalised System of Preference (GSP) Plus status in January this year and under GSP Plus status Pakistan's textile products could be exported duty free or on preferential duty basis for next ten-year, he said. 

Ijaz said Pakistan is one of the leading textile exporting countries in the region and got the GSP Plus status from EU countries. Its textile industry has been competing global market without any roadmap and support while our major competitors like India and China were utilising all channels and resources for capturing the world. Under the prevailing situation we need to opt the same approach to survive in the market. 

Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) Chairman further stated that despite of the industry was confronting certain problems like non-availability of gas and electricity we are making strenuous efforts for enhancing the export volume and to fetch maximum foreign exchange for the country. The provision of uninterrupted electricity, especially gas are vital for dying process of textile industry and at present the industry was suffering adversely because of non-availability of gas, he said. 

Ijaz suggested that concerned department should fix sector-wise priorities for the provision of sui gas to facilitate the industrial sector adding that industrial units were functioning at 40 percent scale due to shortage of gas and electricity and hardly providing required stuff to the global market and under the prevailing situation it is impossible for exporters to increase output. 

Sialkot-based readymade industry is earning US 350 dollars through its export and strengthening national exchequer and providing employment opportunities to thousand workers, he revealed. The Central Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) disclosed that federal government has released funds amounting to Rs 126 million for the establishment of readymade training institute at Sialkot. Textile industry rejects cotton support price   [ top ]

The News, October 05, 2014
KARACHI: Textile industry on Saturday rejected the minimum support price of cotton seeds (phutti) and the government’s plan to buy one million of cotton bales from ginners, saying the decisions will spur cotton import.

“The decisions are not viable,” said Naseem Usman, chairman of Karachi Cotton Brokers Forum.

The Economic Coordination Committee (ECC) of the Cabinet, this week, announced support price for phutti at Rs3,000 per 40 kilograms for the fiscal year 2014-15 and to procure one million bales through the Trading Corporation of Pakistan to bring stability in cotton price in the local markets. The price of cotton declined to Rs5,000 to Rs5,300 per maund (37.324 kilogram) on Friday from Rs6,300 to Rs6,400 per maund on 1 July. The price was hovering around Rs6,500 per maund before the new crop started arriving in the middle of June, it was learnt.

Usman said the decisions are likely to result in surge of import of cotton in the country, as imports would cost cheaper at Rs5,100 to Rs5,200 per maund. “The price of locally produced cotton would shoot to Rs6,400 per maund if ginners would buy phutti at Rs3,000 per 40 kilograms,” he said. “The government has taken the decisions under political pressure. I guess, they would not be implemented in letter and spirit,” he said.

Cotton trading was halted, while the drop in commodity’s price was seen due to a significant increase in supply of phutti to ginners from farmers. “It was not only Pakistani markets which were observing downward trend, but the world’s leading cotton markets, including US, China and India were also performing under pressure.”

Iqbal Ebrahim, former chairman of All Pakistan Textile Mills Association, said there is a great need to support farmers so that they could continue to grow cotton to meet local demands. However, “the decisions ECC took would promote corruption and may end up with stories of scams.”

Ebrahim said the implementation of the decision of buying one million bales is likely to benefit only five to six percent influential ginners, as every ginner could not sell its cotton to TCP under the allocated quota of one million bales. Moreover, the timing of buying the bales will be important. Majority of farmers in Punjab are yet to harvest phutti. They may do that in November. And if TCP opts for buying the commodity before November-December then it would ignore the Punjab’s farmers.

The price of phutti and cotton were expected to maintain downward trend in local and as well as international markets. “I guess the price of cotton may touch 55 cents per pound in New York sometime in November. Accordingly, the price (of fine cotton) in local markets may go below Rs5,000 per maund at a similar time around.” The expected decline in the price would render losses to the government, as it will buy the commodity at comparatively higher prices to benefit farmers and bring stability in price of the commodity at local markets. The government should provide direct subsidy to all cotton growers instead. “The government may provide subsidised seeds, fertilisers, and/or electricity,” he said.

Mukhtar Ahmad Khan, chairman of Pakistan Cotton Ginners Association, however, welcomed the decisions. Khan said it is likely to help growers to sell the commodity in profit. Moreover, it will revitalise cotton trading at local markets. The government should have announced the support price before growers sowed seeds in April. “The announcement at that time would have convinced more growers to plant cotton seeds and harvest additional 25 percent cotton this year.” Pakistan is expected to produce around 14 million bales this year, he said.