Textile exports continue to increase at a moderate pace with value added segments once again leading the growth. According to the export numbers released by the Pakistan Bureau of Statistics (PBS), textile exports registered an increase of 7.2 percent in 8MFY17 as compared to the same period last year.
As it has become the trend for some time now, valued added segments such as knitwear and readymade garments contributed double-digit growth while cotton yarn and cotton cloth exports remained stagnant registering negligible growth.
However, as far as monthly exports are concerned cotton yarn and cotton cloth exports managed to fare better in Feb-18 on a month-on-month basis on account of strong demand from China. Yet, textile exports continue to be constrained by domestic factors, which include the high cost of production and tax refund issues.
The PM Textile Incentive Package of Rs180 billion announced by the government has so far not been able to have the impact desired by local textile players. Implementation has been patchy as evidenced by the delay in payment of sales tax refunds, which have been pending for years in most cases.
In a recent interview with this newspaper, Aamir Fayyaz, the Chairman of the All Pakistan Textile Mills Association (APTMA) put the pending sales tax refunds that the government owes the sector at a whopping Rs120 billion.
The only thing that has gone positive for the sector in recent times seems to be the currency depreciation and the retention of the GSP plus status. Two days back, a second round of depreciation resulted in the rupee devaluation of almost 4.4 percent which follows a drop of almost 5 percent in December. Textile exporters have been complaining of an overvalued rupee for a long time now and this depreciation should help increase the export share.
The other issue that needs to be addressed on a priority basis by the government is the high cost of energy. This has been particularly true for the Punjab based textile industry that comprises of more than 70 percent of the overall sector of Pakistan. Exporters have been complaining of almost double the cost of RLNG due to unavailability of system based gas
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