Textile exports: stagnancy prevails

Textile export numbers for July-17 are out with the sector once again showing lacklustre performance. While many have pinned their hopes on the sector to alleviate the worsening current account deficit, it seems the spark needed to kick things off is still missing.

A closer look at the numbers reveal that overall textile exports have shown a marginal increase of 3 percent on a year-on-year basis, which although better than a decline cannot be termed as a recovery.

Cotton yarn exports registered an increase of 6.3 percent whereas cotton cloth dropped by 8 percent as compared to Jul-16. Coming to the value added sectors, readymade garments posted a solid increase of 20.47 percent but knitwear and towels declined by 5.8 and 13 percent respectively.

The PM package for textile exports seems to have been too little too late, whereas the focus should be on encouraging value added exports such as readymade garments, knitwear and other segments.

Many of the issues being faced by the textile industry remain unresolved despite repeated assurances by the government. Pakistan has lost cost competitiveness due to provision of expensive electricity, frequent industrial loadshedding, currency overvaluation and the unwillingness of the government to release pending refunds in a timely manner.

In recent times this column has also highlighted the need to make the playing field level for players across the entire value chain. More often than not, the incentives have been to players that are not involved in value addition which has resulted in value added segments suffering. Similarly, cotton production has waned and good quality yarn is available in limited supply.

It is alarming to note that the FY17 textile exports of $12.45 billion were 6 percent lower than the previous 3 year average number of $13.2 billion. In the days to come this column will comment on the energy tariff’s role in making textile exports uncompetitive while also analysing the need to subsidize other factor inputs in order to encourage value-addition segments.