European Union has sent a word of cheer as Pakistani textile exports rose, breaking the spell of a slowdown in the country’s global exports, while a new textile upgrade and production policy is around the corner.
Commerce Minister Khurrum Dastgir Khan said: “Textile garment exports to EU rose a handsome 30.68 per cent in January and February inn 2014, compared to the like period of 2013,” on the back of EU grant of GSP plus status for greater market access to Pakistan. The total exports during the two months rose to $446.91 million — up from $342 million in the like period of last year — posting an increase of $104.91 million. At the same time export of home textiles rose to $274.47 million — up from $214.18 million, which show an increase of 28.15 per cent. Leather exports, at $25.49 million were up 15.20 per cent and carpet at $9.88 million were up 12.79 per cent.
Dastgir calls the EU grant of GSP Plus Status to Pakistan as “fruit of a successful economic diplomacy of the present government, which has become visible and the economic indications are showig positive trends.”
The government projects the GSP plus status alone will raise the annual textile exports to EU by an additional $2-$3 billion a year. It says, numerous opportunities are now presenting themselves to Pakistani exporters as a result of widespread trade negotiations with various countries and trading blocks. Islamabad is encouraging Pakistani exporters to make the best use of these openings. Pakistan is also negotiating to raise exports to EU in non-traditional sectors.
EU-Pakistan Joint-Commission which has just ended its session in Islamabad focused on “making further progress on economic cooperation.” Its concluding communiqué said, “ EU and Pakistan welcome grant of increased market access to Islamabad under GSP Plus and express the hope, this will help increase Pakistan’s exports to Europe, creating additional economic growth and jobs.” The two sides also have decided to establish “a dedicated energy dialogue to strengthen cooperation and exchange of information,” leading to actual investment and funding of major energy projects.
Textile exports form nearly 60 per cent of Pakistan’s overall global exports. As such, it is the prime item to improve its external balances and finances raise. Another plus point is that textile exports to EU are rising, on the back of Brussels grant of GSP plus status to Pakistan effective January 2014, while these were indicating negative trends to most other global destinations.
Textiles production is the prime item, hit by the ongoing severe energy crisis in Pakistan, over which the entire industry is up in arms against Prime Minister Nawaz Sarif’s government because of its failed promises to restore power and natural gas supplies. The recent strengthening of the Pakistani Rupee against the greenback, and other hard currencies has also hit the exports.
Abbas Khan Afridi, Minster for Textile Industry (MoTI), said: “The industry is confronted with major challenges like the ongoing energy crisis, slowdown in value addition and branding, unskilled manpower, old machinery, and heavy debts owed to banks.” In order to overcome these problems, the First Five-year Textile Policy — 2009-14, announced by the outgoing Pakistan Peoples Party Government, had envisaged several reforms, and set an export target of $25 billion
This target was to be achieved by end fiscal-2014, against the actual exports of $9.011 billion in 2009. But all hopes were frustrated as several key steps of the Policy were not implemented. The result of this failed Policy: the country ended up with exports reaching only $14 billion at end- fiscal year 2014.
In order to overcome the ongoing problems of the textile industry, the present pro-business and pro-growth government is busy forming a new Textile policy –2014-19.
It is going to raise the export target to $ 26 billion to be achieved by 2019 — compared to the present actual exports of $13.064 billion. In order to attain the new target by 2019, Islamabad especially plans to focus on value addition, giving new incentives, and help expand the production and export through financial and banking facilitation. On the top is ensuring uninterrupted power and gas supply to the industry, MoTI says.
Import duty on the most modern textile machinery will be slashed. The present bank interest rate of 12 per cent for the industry will also be cut down, besides other incentive to bring down the cost of production. Value addition and a major technological up-gradation are the hallmarks of the new policy. In order to facilitate such imports, low-interest funding from the banking system will be available.Value addition and technology up-gradation aim at encouraging investment in shuttle-less looms and expansion of the apparel products. MoTI is now conscious of fact that 950 textile products are currently being traded globally, but Pakistan exports just 13 of them. This number can be raised to 100 plus, as a result of the technology up-gradation and value addition. It will also reverse the present decades-long practice of exporting raw materials, principally cotton yarn.
The new policy will have undertake a lot of hard work to push back Paistan’s international competitors — China, India, Bangladesh, Turkey, and Vietnam. Between 1980 and 2014, China’s textile exports shot up from $14 billion to $200 billion. Indian exports rose from $12 billion to $30 billion.
Turkish exports rose from $ 0.5 to $ 24 billion and those from Bangladesh from $0.5 to $23 billion. Pakistani exports rose from $1.0 to $13.064 billion.Islamabad now has a competitive edge over two of its rivals — China and Turkey — where labour cost has risen higher than Pakistan.
The GSP plus status has helped Pakistan gain in the form of 7-8 per cent higher export of textiles. Larger textile exports look like really happening. During the first nine months of the current 2014 — July, 2013 to March 2014 — textile exports were up at $10.38 billion which is eight per cent higher than the like period of 2013. Pakistan’s top five textile destinations now are: United States, United Kingdom, China, Germany and Bangladesh. Now new opportunities are open up both for higher and more sophisticated consumer products, especially those for the booming ladies global demand, larger exports, and still higher, multi-billion-dollar, import of high-tech textile machinery.