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The government anticipates an increase in export earnings from the textile sector during the current fiscal year after the grant of the GSP plus status to Pakistan by the European Union. Is concentrating on the traditional US and EU market enough? As leading players like Bangladesh have total garment exports of around $22.50 billion last year, in just these two markets alone.
Almost more than 60 percent of our exports are to the traditional markets; US, EU and Middle East. The brands and buyers in the traditional markets impose harsh conditions often on the textile manufacturers and exporters, and at the same time they bargain for cutting prices of products as the countrys export depends only on the US and EU markets.
"It is amazing that Pakistani textile exporters have never truly entered into African markets in an institutionalized manner," says Majyd Aziz, former Chairman of Karachi Press Club. "It is the mindset of exporters to focus on EU markets. We have neglected the African market and just concentrated in North America and EU.
He further asserts: "We are exporting around $4.5 billion to US. It has never given us a GSP status. It focuses on IMF loans and supplying arms and ammunition but never given any economic benefits such as free market access to boost our textile exports. There is tremendous opportunity to survey the African market and to do textile business like other rice exporters and pharmaceutical companies have done."
Aziz also adds that by limiting to two markets we are not branching out and not creating economies of scale to reap benefits to our industry and country.
If there is an increase in the volume of exports to the new markets, the bargaining capacity of manufacturers on prices will rise while the sector will get relief from the reliance on the traditional market.
According to Ibrahim Mahmood, PRGMEA senior research analyst: "In traditional markets like Germany and US, we know who the buyers are and have a payment guarantee, whereas when moving to new markets like Africa we have to take blind leap of faith by getting to know the new buyers and experimenting with the assurance that they will be able to make full payments."
With granting MFN status to India being postponed there is a need to ensure sustainable textile business by reducing the reliance on traditional markets. With the present market there are sufficient orders in eight months but if exporters can seek new markets in Latin America and South Africa, same flow of orders will persist throughout the year as when there is winter in the US, the summer season prevails in Latin Americas and South Africa.
It falls essentially on policymakers to engage in serious diplomatic efforts to explore untapped markets. To seize the new markets, the government-to-government negotiation is a must, to help maintain the higher export growth. The market diversification will benefit manufacturers to reduce dependence on selected traditional markets and it will also increase the bargaining power in setting textile product prices.