For all the fanfare and attention it received, the PM’s export package doesn’t seem to have worked so far; for the month of February, Pakistan’s textile exports were down six percent over last month, and around three percent year-on-year. For the cumulative eight months ended FY17, textile exports are down two percent year-on-year.
The low-value segment saw huge declines, offsetting the positive impact from the value-added end. Although cotton yarn has seen a 3.9 percent increase in volume, the dollars earned were less by 6.1 percent over 8MFY16. Raw cotton seems to have seen the largest decline – 53 percent in volume and 49 percent in value. The period under review has been marred by low cotton production for the second year in a row, hurting cotton exports and escalating the costs for spinners and the further downstream industry.
Nevertheless, the value-added end has seen some positive results. Knitwear, bed wear, and readymade garments have seen higher quantity exports (2.1%, 8.9%, and 3.3%, respectively) for the eight months ended FY17. As per the SBP’s recently released quarterly State of the Economy report, higher quantum exports indicate that these products are in demand in key export markets. However, it says the recovery in international cotton prices has yet to translate into higher unit values for Pakistan’s high value-added textile exports. This may be why in spite of higher volumes, the dollar earned by these items have not increased by as much (except in the case of readymade garments).
Thus far, the export package doesn’t seem to have made much of an impact. Various associations are still making hue and cry over unreleased refunds. Although the energy situation has improved significantly, the core issue of competitiveness still needs to be addressed if the industry is to be revived.
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