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News Clips 29 June, 2015

[ Millers decide to shut down units voluntarily: APTMA ]
[ Exports again fall short of target ]
[ GSP Plus status helps boost exports by 20 percent: German envoy ]

Millers decide to shut down units voluntarily: APTMA   [ top ]

Business Recorder, June 29, 2015
Chairman All Pakistan Textile Mills Association S M Tanveer has said that an emergent meeting of the general body of Association has decided to close down the textile industry of Pakistan voluntarily. 

"An Emergent General Body meeting has deliberated upon the adverse circumstances and found it unfeasible to incur losses by operating mills partially," he added. 

He said the mills have decided on their own to put their operations off voluntarily because of the viability issue. "We do not want confrontation with the government therefore we are closing down mills voluntarily," he said. 

According to him, the cost of doing business in textile industry has hit through the roof. Meanwhile, the burden of incidental taxes, provincial cess, system inefficiencies and punitive withholding tax regime has added fuel to the fire. "Thus, the business of textile industry has become unviable in Pakistan," he lamented. 

He said the government has not brought the un-organised sectors into tax net and billing the textile industry. All these incidentals and punitive measures have hit the sustainability of textile industry in Pakistan. 

Furthermore, he said, it is also an irony that the federal government has imposed a surcharge of Rs3.60 per unit to mitigate the positive impact of tariff reduction by National Electric Power Regulatory Authority. "The textile industry is unable to bear this burden despite operating on independent feeders with no line losses and theft and 100 percent payment of bills," he pointed out. 

He said the regional competitors are paying less than 10 cent against 14.50 cent electricity tariff in Pakistan. Majority of the mills are already operating partially because of energy mismatch at present, he added. 

Chairman APTA said the textile millers from Khyber Pakhtunkha, Lahore, Faisalabad, Multan and Karachi have decided to close down operations voluntarily and lay off millions of workers, as they have nothing to offer their international buyers against the regional competitors. 

Exports again fall short of target   [ top ]

Photonews, June 28, 2015
Islamabad: Pakistan’s export of merchandise fell short of target by over $2.8 billion in the outgoing fiscal year. It was the third consecutive year in which the ruling PML-N failed to achieve the export target. 

The government had projected an export target of $27bn for 2014-15, but actual export proceeds stood at $24.2bn. 

Overall exports witnessed a negative growth of 3.5 per cent in the outgoing fiscal year as compared to previous year’s export proceeds of $25.1bn. Export target for 2013-14 was projected at $26.9bn which was missed by over $1.8bn. 

Similarly, export target was missed by almost similar amount and actual proceeds stood at $24.8bn in 2012-13. 

One of the major factors of decline in exports is concentration of exports in textile and clothing which constitute as much as 50pc. Exporters blame the ministry of textile industry for its failure to guide the industry. 

An official report linked drop in exports to decline in commodity prices, particularly cotton and rice. The report says that textile exports are largely flat, mainly due to high cost of doing business, but Pakistani exports earnings could have been much higher had there been a tilt towards value-added products. The fact that towels and knitwear exports are up supports this view. 

The fluctuations in export earnings are generally attributed to decline in demand and falling international market prices, erratic energy supply and rising input cost. 

According to an official, there are governance issues within the commerce ministry as many competent officers were sent to other ministries. 

There are some administrative issues as well which also need to be addressed. The Trade Development Authority of Pakistan is mandated to evolve marketing strategies, but consultants appointed on political grounds are not delivering. Most of the funds meant for export promotion are being used on foreign trips by bureaucrats. 

While the government has created 50 posts for commercial attachés in diplomatic missions to promote marketing of Pakistani products, there is no benchmark to check their performance. 

As per Annual Plan 2015-16, exports were targeted to grow by 5.8 per cent to reach to $27bn in 2014-15. 

The target was set on account of momentum building in exports due to GSP-Plus status, underlying assumption of improvement in energy situation and increase in trade with regional partners, etc. 

The GSP-Plus scheme is effective from Jan 1, 2014. 

With over $19bn in textile exports, Bangladesh has already gone too far by investing in quality readymade garments. 

After China, Bangladesh is the second biggest textile exporter as it has doubled its exports during the last 10 years, leaving both its traditional competitors Pakistan and India behind. 

No doubt, export volume has increased over the past few years, but it has remained focused on few items, namely cotton and cotton manufactures, leather, rice, chemicals and pharma products and sports goods. These five categories account for about 64pc of the country’s total exports for the past many years. 

Although Pakistan trades with a large number of countries, its exports nevertheless are highly concentrated in few countries. 

About 60pc of Pakistan’s export destinations are to 10 countries, namely, US, China, UAE, Afghanistan, UK, Germany, France, Bangladesh, Italy and Spain. 

Further, among these countries, the maximum export earnings come from US (15pc) and European countries (20pc) making up approximately one-third of the total. China with its share (9pc) in total exports has become our regional trading partner. 

The share of export to Afghanistan in total exports, however, witnessed a decline in recent years from 10pc in 2011-12 to 8pc during this year. 

The share of exports to EU countries, like France, Italy, Spain remained relatively stagnant. 

GSP Plus status helps boost exports by 20 percent: German envoy   [ top ]

Business Recorder, June 27, 2015
German Ambassador to Islamabad Dr Cyrill Nunn said on Friday that granting GSP Plus status to Pakistan by the European Union had an "extremely positive" impact on its exports to the EU, which had increased by 20 percent last year. Pakistani exports to the EU has earned it $1.3 billion foreign exchange hence the impact of Generalised System of Preferences (GSP) Plus on Islamabad's exports had been very good and there was more demand for Pakistani goods. 

If its exporters were provided uninterrupted power supply its exports to the EU would increase further, he told APP in an interview here. Questioned on power outages, he said it was a challenge for Pakistani exporters because it makes their products a little bit more expensive and if they could get more electricity their margin of profit would increase. 

"I would say that if the energy crisis was resolved their capacity to export more would be increased. I have no doubt about that. I think energy restrictions are limiting the capacity of the exports business mainly textiles," he said. Acknowledging expertise of the Pakistani textile businessmen, he said, "They are very clever at circumventing many difficulties they face which is not very easy and I have a lot of respect for that. They are very good at finding solutions where they can work at any time." 

"The real challenge for them is to meet their commitment right in time and you know it is business, you have to be extremely precise. The companies are very good at doing that." Asked about trade between the two countries, after GSP Plus lowering tariff on Pakistani exports, he said exports of Pakistani goods and textiles and leather garments had registered significant increase since 2014. 

"We have a very good business delegation's visit which I would say is a sign of interest in Pakistani market. Besides when it comes to dealing with the Pakistani companies, it is company's policy and I have no information about that." Questioned about Volkswagon's chance of investing in Pakistan's auto industry, the envoy said, there was a high ranking member of the company in the German business delegation which concluded its visit to Pakistan recently. 

"There is an interest in the market and for the rest I would say we have to ask the company what are their plans." They have, had a very good interaction with the operators of business companies in Karachi and have the first-hand knowledge about the opportunities. They also visited Karachi Stock Exchange which was a hub of the business activities. 

"They are business people, they look for real opportunities" hence they also met ministers of the government during their visit to Pakistan for having a holistic picture of the business environment. He said there were two important upcoming visits to Germany which would help cement commercial ties between the two countries. The first business delegation is expected to visit Germany which will be headed by Federal Commerce Minister Ghulam Dastagir Khan, but the dates have yet to be decided. 

The second business delegation to visit Germany would be from Sindh. These two visits, expected to take place in coming months, would further promote business-to-business contacts between the two sides. Cyril, who is nearing his diplomatic assignment in Islamabad, wrapping up his three years tenure, said it had been wonderful to visit various parts of Pakistan. 

The envoy said he visited industrial hubs of Punjab like Faisalabad, Sialkot and Karachi, which gave him a chance to speak to the people belonging to diverse fields, as he wanted to ensure that there is an element of Pakistani-German interaction in many parts of the country not only the capital. 

Asked on his priorities, the envoy said his first priority was to constantly work to promote what he called the economical theme, which had been described by Pakistan as the backbone of its economy. His second priority had been to foster development co-operation by promoting commercial ties between the two countries in this regard. The ambassador said that German companies were also involved in providing technical expertise in storing the energy at the recently inaugurated 100MW solar project at Bahawalpur. He said over fifty German companies were doing business in Pakistan in various fields. He said once the business companies break the psychological barrier of coming to Pakistan and interacting with businessmen here, their pre-conceptions about the country change because "it is a good market."