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News Clips 24 August, 2013

[ Power tariff hike to render textile sector uncompetitive ]
[ Textile, clothing exports rise ]
[ WeBOC glitch hurts exports ]
[ Aptma initiative to double exports ]
[ India: Textile exports seen rising ]
[ Sri Lanka textile mill ups export to Bangladesh, but losses mount ]

Power tariff hike to render textile sector uncompetitive   [ top ]

NATION, Staff Report, August 24, 2013
LAHORE - The Pakistan Readymade Garments Manufacturers & Exporters Association (PRGMEA) has strongly criticized the abrupt increase of 74 per cent in electricity rates by the new government and urged the authorities to withdraw the jump as it would render local value-added textile industry uncompetitive in the international market. PRGMEA Central President Sajid Saleem Minhas said that it is understandable if the tariff is raised by 5 or 10% but the drastic jump of 74% is totally illogical.

He said that the hike in electricity tariff would make garment export costlier and render Pakistani exports uncompetitive in the international market. Subsequently, India, China and Bangladesh would capture markets presently dominated by Pakistani exporters. He suggested the government that before making any dramatic changes in the electricity prices, the stakeholders of the industry should have been taken into confidence and engaged to workout the electricity tariff.

Sajid Saleem Minhas said that increase in electricity tariff from Rs9.18/KWH to Rs14.82 under the new energy policy will render garment industry inefficient; as sharp increase in power rates is a draconian measure against industry.

An exorbitant increase in electricity tariff is a death warrant for garment and apparel industry, which is already facing disparity in the inter-provincial electricity rates and becoming unviable fast with every passing day. PRGMEA North zone chairman Farooq Meyer feared that the industry would lose its strength of earning $13-14 billion exports per annum due to looming energy crisis amidst an indifferent attitude of policymakers. The new industrial tariff would wipe out the value-added textile industry in Punjab altogether.

PRGMEA Chief Coordinator Ijaz Khokhar stated that the government was not in a position to provide uninterrupted power and gas supply to the industry due to which industry is facing increase in cost as a result of less than capacity output and now such a hefty tariff increase cannot be justified.

Ijaz Khokhar said that since the country was passing through an era of economic uncertainty persistent inflation, high cost of doing business as a result of which industry was facing severe challenges such as war on terror and insecurity etc. such cost increases could lead to decrease in export earnings and escalating trade deficit. He feared that if the precautionary measures are not taken carefully the survival of the industry would become elusive.

Textile, clothing exports rise   [ top ]

DAWN, Mubarak Zeb Khan, August 23, 2013
ISLAMABAD: Pakistan’s export of textile and clothing products witnessed a double digit growth in the first month of the current fiscal year from a year ago.

The export proceeds from these sectors rebounded following substantial increase in exports of raw cotton, showed data of Pakistan Bureau of Statistics here on Thursday.

Export of textile and clothing surged to $1.136 billion in July 2013 from $1.090bn during the corresponding month of last year. Textile and clothing products, which witnessed a negative growth are cotton carded and yarn other than cotton yarn in July 2013 over the same month last year.

However, growth in exports in July was mainly driven by knitwear, bed-wear, towels and readymade garments, which are valued-added products.

An official source in the Commerce Ministry told Dawn that exports witnessed a double digit growth because of increase in export to the European market owing to preferential market access on selected products.

The European Union preferential package on import of 75 items was in operation since December 2012.

“Our exporters have received more orders than in normal circumstances because of preferential duties,” the official added. A sector-wise analysis showed that export of low value-added products, such as cotton yarn, was up by 15.55pc, cotton cloth 16.18pc, made-up articles 5.81pc and other textile material 1.64pc in first month of the current fiscal year over same month last year.

Export of knitwear increased by0.99pc, bed-wear 9.60pc, towels 7.10pc, and readymade garments 16.25 pc in July 2013 this year over the same month last year.

Statistics shows that export of raw cotton witnessed a robust growth of 476.56pc, and art, silk and synthetic textile by 3.86pc in the first month of the current fiscal year over last year.

Industry sources said that consistent supply of gas during the period under review to textile sector produced the desired results. The growth in yarn and fabric exports was mainly because of improved energy supply.

The full capacity utilisation of production caused growth in export of home textile — towels and bed-wear as well.

This shows that in case of uninterrupted supply of energy, export of textile products would increase many-fold.

Contrary to this, over 18.13pc increase was also witnessed due to rupee depreciation against the dollar in the past few months. The non-textile products witnessed a growth of 11.68pc in the first month of the current fiscal year as its value stood at $1.061bn in July 2013 from $0.95bn over the corresponding month of last year.

The exports of non-textile products was mainly driven by exports of sugar, meat, fish products, carpets, sports goods, leather products, etc.

WeBOC glitch hurts exports   [ top ]

DAWN, Staff Report, August 22, 2013
KARACHI: The exports of five zero-rated industries have been paralysed by a glitch in the auto clearance system Web Based Auto Clearance (WeBOC) of the Customs.

The system had not been accepting or loading export Goods Declarations (GDs) for over two months and as a result the entire supply chain of zero-rated export trade has been paralysed, exporters said on Wednesday Despite repeated efforts by exporters’ representative bodies and reminders to high-ups of customs and officials of Pakistan Revenue Automation Ltd (PRAL), which developed the WeBOC software, no response was received till the filing of this report.

The non-acceptance of GDs by WeBOC system at export stage is causing multiple problems for exporters who also could not file their sales tax returns for the last two months, they added.

Exporters lamented that the last date for filing of sales tax returns for the month of June 2013 was extended to July 29, 2013 but to date the error has not been removed by the PRAL.

As a result of this, they said a large number of exporters have been declared as non-filers of sales tax returns and their names have been included amongst “Non Active” in the Federal Board of Revenue’s web portal without any fault on their part.

After appearing as “Non Active” on the FBR’s web portal the credibility of a large number of exporters has been damaged and above all are now facing multiple problems including losing their entitlement to purchase raw material at reduced sales tax rate of 2 per cent instead of normal rate of 17pc.

The situation has become so critical for exporters that their entire supply chain has been badly disturbed and could not keep their production and export activity moving.

M. Jawed Bilwani chairman Pakistan Hosiery Manufacturers Association (PHMA) said that exporters were suffering on many accounts because even their sales tax refund claims are being rejected by the FBR’s auto system of RMS due to “non active” status in the Web Portal.

Similarly, he said the customs authorities have stopped their import consignments of raw materials for application of higher rate of sales tax which otherwise have to be cleared at reduced rates. All the zero-rated exporters are also being asked by utility companies to pay 5 per cent extra sales tax due to non active status.

Mehtabuddin Chawala chairman Pakistan Towel Manufacturers Association (TMA) said that the FBR should have first test run the auto uploading of export and import data in the WeBOC system and only then asked the taxpayers to go through it.

Aptma initiative to double exports   [ top ]

DAWN, Staff Report, August 24, 2013
LAHORE, Aug 23: All-Pakistan Textile Mills Association (Aptma) would launch a new initiative from Jan 1, 2014 to improve the image of Pakistani textiles around the world to double the industry’s exports to $26 billion over the next three to four years in the wake of free market access from the European Union.

The initiative — Triple Bottom Line (TBL) — is meant to make and project the entire textile supply chain environment-friendly and socially responsible industry towards the people. Aptma has already hired a Dubai-based Pakistani businessman and lobbyist, Raza Jaffar, for implementing the TBL (Planet, People and Profit) initiative and improving the image of the industry. It also plans to organise textile shows in the US and European countries to create contacts with major buyers in those markets. Aptma chairman Ahsan Bashir said a comprehensive strategy was being evolved to take full advantage of the free market access under the EU’s GSP+ system.

He said the new government had largely solved the energy problem of the textile industry in Punjab, at least for the time being, which has helped capacity utilization to 90pc.

“Now growth in textile trade is our next target. We are aiming for $30bn exports.”

Bangladesh, which purchases cotton, yarn and fabric from Pakistan and elsewhere for its industry, has increased its textile exports from $5bn to almost $27bn in last eight years after obtaining free market access from the EU and is aiming for $40bn in next few years.

Aptma leader Gohar Ejaz said the decrease in China’s share in the world textile trade to $270bn from $300bn in last one year and the EU’s GSP+ trade incentives for Pakistan had opened a big window of opportunity for Pakistan to not only push its textile exports to the world but also produce a trade surplus to help the government overcome its current account woes in the next 3-4 years.

He said Aptma had already adopted a number of initiatives during the last three years to comply with international business practices and was financing cotton research in the country to improve quantity and quality both.

He said several Chinese textile companies had expressed their intention to set up joint ventures with the Pakistani manufacturers because textile trade in China had become expensive.

Another Aptma leader Aamir Fayyaz said an integrated policy was being formulated to convince international customers that Pakistan had a reliable textile chain for business purposes.

He said the GSP+ opportunity may also bring new challenges for the country’s textile industry and Aptma was preparing its members to meet those challenges.

Raza said triple bottom line was a widely adapted form of corporate social responsibility where organisations were responsible both nationally and internationally for betterment of societies.

India: Textile exports seen rising   [ top ]

BUSINESS STANDARD, Somesh Jha, August 23, 2013
The textile sector could witness a jump in its export numbers this financial year due to the falling rupee as there is a spark of revival witnessed in the first quarter of this financial year. Textile exporters feel that the depreciating rupee could lead to a 5-10% rise in textile exports this fiscal after a bleak year in 2012-13.

"There should be 5-10% increase in overall textile export as a result of falling rupee and also, because we are becoming more competitive in this sector. Hence, there would be a turnaround after a gap of few years in the textile industry", said Amit Goyal, President, Confederation of Indian Apparel Exporters (CIAE).

There was a marginal rise in the export of textile in first quarter (April-June) of this financial year as the exports rose by 0.3% to $7793 million from $ 7766 million in the same period last year, according to Foreign Trade Statistics of India. The textile exports in 2012-13 had fallen 5% to $31,718 million in 2012-13 from $33,371 million in 2011-12.

The impact of the falling rupee, which had depreciated around 5% in first quarter of this fiscal year over the same period in 2012-13, has already reached the ready-made garments segment where exports rose by 11.7% to $3076 million in April-June period from $3437 million in corresponding period of 2012-13. This, economists say, is a healthy sign for revival in textile exports.

"Rupee depreciation will bound to help the overall textiles sector because our finished product is garment and if we are doing well in that, other segments would also do well. Ready-made garments will drive the growth in other segments of textiles and hence, overall textiles export would be better this year", said Ajay Kumar, economist, Confederation of Indian Textile Industry (CITI).

However, the exporters felt that not only rupee, but several other factors also contributed to a surge in textile exports. "It is true that the rupee depreciation has contributed to the export rise but that is only partial as around 40-50% of the impact had reached the exporters. The rest is due to a rise in demand for textiles outside as there is a revival in the US market which is a good sign", said Goyal

He also added that the market is shifting to India from China due to higher cost of production there. "In China, there is a rise in labor cost, hence, there is shift in some of orders from China which is another factor", said Goyal.

The proportion of textile exports to total export in first quarter of 2013-14 increased to 10.78% from 10.57%.

However, segments such as cotton textiles, man-made wool and woolen, silk, etc did not perform well in terms of export. Cotton textiles export declined by 10.4% to $2326 million in first quarter of this year against $2596 in same period last year. In this period, wool exports declined by 7.5% to $2326 million from $2596 million and that of silk plunged 8.6% to $95 million from $104 million.

Experts believed that these segments would not produce good results this year too. "Silk, wool we are going to suffer this time also. These segments are not doing pretty well as we are not inherently better in terms of wool and silk, hence, we do not expect much from this segment", said Kumar.

However, there is a surge in demands for carpets in international market as the exports for carpets (except silk) rose 12% to $254 million from $226 million, and that of silk carpets rose magnificently to $11.8 from $1.4 million.

Almost half the countries to which India exports textiles saw a decline in numbers in Jan-April period of 2013. For instance, the textile exports to China declined by 27%. However, there was a pickup in exports to countries like US and Bangladesh where outbound shipments went up by 7.5% and 16% respectively.

"Our raw material is now going to Bangladesh and not China as China had last year procured a lot of cotton yarn from us. Nearly 48% of our cotton yarn was exported to China and hence, they might be utilizing the buffer stock", explained Kumar.

He further added that US contributes to 20% of our ready made garment and hence, a rising demand in the US markets could be a bumper ride for textiles this year.

Sri Lanka textile mill ups export to Bangladesh, but losses mount    [ top ]

Aug 22, 2013 (LBO) - Kuruwita Textile Mills Plc, a unit of Sri Lanka's Brandix Apparel group said exports to Bangladesh rose in the June 2013 quarter but losses increased amid cost increases.

The firm lost 211 million rupees in the quarter up 355 percent from a year earlier. It reported losses of 8.46 rupees per share in accounts filed with the Colombo Stock Exchange.

Kuruwita Textiles said revenues rose 11 percent to 1.82 billion rupees in the June quarter, but expenses rose at a faster 23 percent to 1.98 billion rupees, giving a gross loss of 157 million rupees against a profit of 44.7 million rupees a year earlier. Exports to Bangladesh had grown to 41 percent of sales in the June quarter from 31 percent last year.

"However, it has to be noted that the Bangladeshi orders carry comparatively lower margins due the lower average selling prices partly due to the effects of the off season for the company’s product range," chairman Aslam Omar told shareholders.

He said raw material costs were 15 percent higher than last year but they could not be passed on fully with higher selling prices. Electricity costs were also higher.

"The management has been actively looking at mitigating these adverse impacts and is currently reviewing alternatives," Omar said without elaborating.